At the heart of every Deep Zoom Image file lies a tiled image pyramid that allows the rendering engine to pick and choose only the data that is required for a particular view. Each level is significantly smaller than the next, and is loaded as soon as it becomes available. The smooth Seadragon experience is created by progressively loading each new resolution level and seamlessly blending between them.
The Deep Zoom Composer got an update with new added features and numerous bug fixes; you can check if you have the latest version by opening up Deep Zoom composer, then navigate to Help > About Deep Zoom Composer and check if it says November 2008 Release.
U. Borghoff, P. Rödig, and J. Scheffczyk. Springer-Verlag Berlin Heidelberg, Online-Ausg. edition, (2006)by Uwe M. Borghoff, Peter Rödig, Lothar Schmitz, Jan Scheffczyk.