Amara Graps' introduction to wavelets is great; I probably would have suggested the same resource.
Besides being localized in space, wavelets are more versatile than Fourier transforms because wavelets can use arbitrary scaling functions (or 'wavelet basis' functions), while Fourier use the sine and cosine functions exclusively. However, the Fourier transform is unbeatable when it comes to isolate periodic image structures, or features that can be well characterized in frequency, such as regular patterns and interference artifacts.
In PixInsight, most tools use the
à trous (with holes) wavelet transform algorithm. Unlike the pyramidal algorithms (such as the ones described in the introduction above), the à trous algorithm is
redundant. This means that each scale (or wavelet layer) is an image with the same dimensions as the original. This property allows us to implement powerful transformations accurately without the risk of generating artifacts. Another advantage of the ATWT algorithm is that the inverse transformation (reconstruction) is just the sum of the decomposition layers. The algorithm is both versatile and computationally efficient.
In PixInsight, we are just starting to scratch the surface of wavelets. We have a large amount of work ahead. For example, during the next months you'll see new wavelet-based tools, such as a morphological wavelet transform tool (a wavelet transform based on morphological median filters instead of convolutions), and significant performance improvements in all wavelet-based tools. Besides wavelets, there are many more
lets. For example, ridgelets and curvelets allow isolating structures not only as a function of their scale, but also of their orientation.