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A text file is a file that is properly understood as a sequence of character data (represented using ASCII, Unicode, or some other standard), separated into lines. Typically, when a text file is displayed as a sequence of characters, it is easily human-readable (though perhaps not understandable - for example, the Breakout level file was a text file, but it certainly wouldn't be understandable without some sort of decoder telling which numbers represented what).
A binary file is anything else. A binary file will include some data that is not written using a character-encoding standard - typically, some number would be represented using binary within the file, instead of using the character representation of its various digits (in some base).
Whether you use a binary file or a text file for storing information depends on basically two questions.
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