Inline elements are vertically aligned to the baseline, not the very bottom of the containing box. This is because text needs a small amount of space underneath for descenders - the tails on letters like lowercase 'p'. So there is an imaginary line a short distance above the bottom, called the baseline, and inline elements are vertically aligned with it by default.
There's two ways of fixing this problem. You can either specify that the image should be vertically aligned to the bottom, or you can set it to be a block element, in which case it is no longer treated as a part of the text.
In addition to this, Internet Explorer has an HTML parsing bug that does not ignore trailing whitespace after a closing element, so removing this whitespace may be necessary if you are having problems with Internet Explorer compatibility.
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