Optical zoom uses the optics (lens) of the camera to bring the subject closer.

Digital zoom is not really zoom, in the strictest definition of the term. What digital zoom does is enlarge a portion of the image, thus ‘simulating’ optical zoom. In other words, the camera crops a portion of the image and then enlarges it back to size. In so doing, you lose image quality. If you’ve been regularly using digital zoom and wondered why your pictures did not look that great, now you know.

You'll have a better final quality to your image by just using the optical zoom on your camera, and cropping closer using your editing software on your PC if you need to.

What he said

From the point of view of taking pictures, digital zoom is a bit of a fake, in that you can do the same thing later (and better) in your computer. But for looking at pictures on your camera display, it has its uses, as you can look closer at a bit of your picture, to see if it is as you want it to be - if not, you can take it again. Be aware that this only lets you look closer, there is no more detail taken over and above the original shot. i.e., there is no actual "zooming" done.