What’s the difference between saving a vector as .AI and saving as .EPS

.ai

Contains:

• Native Illustrator content (unflattened) – used when file is reopened in Illustrator
• PDF 1.4 content (unflattened) – used when file is opened or placed anywhere else*

*In the Illustrator Options dialog that appears when you save a native .ai file, a checkbox called Create PDF Compatible File, marked on by default, determines whether the PDF portion of the file is included when the file is saved. With the option turned on, your file size grows, but the file can be read by apps like InDesign and Photoshop. Turning it off will chop the file size in half (and speed up save time), but the file will only be able to be reopened in Illustrator.

.eps

Contains:

• EPS content (flattened) – used when file is opened or placed anywhere else
• Native Illustrator content (unflattened) – used when file is reopened in Illustrator*

*Remember that Illustrator saves its native content for the version that you specify. So if you save your file out as an EPS file compatible with Illustrator 8, then the native Illustrator data that is saved along with the file is Illustrator 8 data — a format that didn’t support transparency. Also, saving back to previous CS versions mean you’re going back to the pre-new text engine versions, and text won’t be editable, even if the file is reopened in Illustrator CS2.

source

The upshot is, when saving from Adobe Illustrator, both .ai and .eps formats include the fully editable native Illustrator data.

There are two advantages of saving to .ai:

1. Decreased file size, especially if you don’t select the “Create PDF Compatible File” option.
2. .eps is a more generic encapsulated format — many different applications can save .eps files. So by saving to the .ai format you know that the file was created in and saved from Illustrator and will be fully editable. If your .eps file loses its metadata you won’t know if it has native Illustrator content or if it simply contains vector/bitmap data created in another application.

Of course, the advantage of saving to .eps is that it is a more portable format. It can be embedded in a wider variety of non-Adobe documents and applications.