Hi all, first post, so be gentle. Extremely useful start to the thread on image preparation.

I am preparing the product images for my new site. I'm using all square images for simplicity, so small are 120px, medium 180px and large 360px.

Forgive me if the question has already been answered in this thread or elsewhere, but I need to get my head around where each size version of the image is used on the site. I understand _MED is used in the product display, and _LRG is used in the 'larger image' pop-up. In configuration>images we have at the top

Small Image Width
Small Image Height

So should this be set to 120px a 120px, the size of my prepared image, or does it not matter?

and at the bottom a whole list of images

Image - Product listing width
Image - Product listing height
etc.
etc.

Are all these various images produced from the Small Image version?

If i set these sizes to say 80px x 80px, will they be resized from the 120px x 120px small image or the 360px x 360px large image? My pages will be very image intensive, so I don't want small images drawn from big ones with unnecessary large file sizes and slowing down of page loading.