SnagIt images can be perfectly clear. However, there are three things that can cause image quality problems: scaling the capture in SnagIt; scaling the image in the application that is displaying the image, such as Microsoft Word; or using a "lossy" image file format.
Scaling the image
If the image is scaled, particularly if it is scaled to smaller dimensions, image quality will degrade. This is true if you scale the image in SnagIt or in the application that is displaying the image. For example, if you insert the image into a Word document and the image is scaled in Word, the quality will degrade.
Why does scaling cause image quality degradation? Imagine that you transferred your screen capture onto a tile floor comprised of many very small tiles. If you wished to reduce the size of the floor by 50%, you could remove every other tile and then slide the remaining tiles back together again. The problem occurs because some of the tiles that you removed were colored tiles that comprise the content of the image. If there was writing in the image, some of the tiles that comprised characters might be removed. The "dot" over an "i" for example might have been on one of the tiles that you removed, or portions of the top curve in an "e" might now be gone. This results in broken characters, jagged lines and an overall "fuzzy" appearance of the image.
This is the same type of thing that happens when you scale an image. Computer images are comprised of pixels rather than tiles, but the effect is the same. When you remove pixels to scale the image, some of those pixels that are removed are parts of the image. The more that you scale the image, the greater the degradation of the image quality.
Scaling an image in another application
If you place a screen capture into another application such as a PowerPoint slide or Microsoft Word, etc., make sure that the application is configured to display the image at 100%. In most other applications, then the image will suffer the same image quality degradation that would occur if you scaled the image in SnagIt.
If you plan to use an application like Word, or output to PDF or Printer - basically pritner-friendly outputs - and want to change the size of the image, you can use Snagit to change the DPI (under Effects > Image Resolution in the main capture window, and under the file menu Image > Resize Image > Advanced in the Snagit Editor) to scale it more smoothly. For example, changing the DPI from the default of 96 to 160 will create a smaller image when it is printed, our outputted to Word or a PDF file. However, the effect will be clearer than if you had resized the image within the Snagit editor directly.
Using a lossy file format
Different image file formats such a JPG use a compression algorithm to make the image have a smaller file size. Some compression algorithms are called "lossy" because they sacrifice image quality for the sake of compression.
JPG is a "lossy" file format. Most notably you will notice artifacts around characters that look like little dots or smudges. To preserve quality, choose a different, lossless file format such as BMP, PNG, or TIF.