What a SVG file actually is
SVG is not a grid of pixels at all: it is an XML document describing shapes, paths and text, which the renderer draws at whatever size it is asked for. That is why a 4 KB logo stays perfectly sharp on a billboard, and why the file is often smaller than a thumbnail of itself.
SVGs come out of Illustrator, Figma, Inkscape and icon libraries. Logos, icons, charts and diagrams are the natural cases — anything built from shapes rather than captured from a camera.
What you get from ICO
ICO is a container that holds one or more small square images, with transparency, for use as an icon. It caps out at 256×256 — anything larger has to be scaled down, and the format is not intended for general pictures.
Every browser requests /favicon.ico by default, with no HTML required, and Windows uses ICO for application and shortcut icons. It is a narrow format that is completely reliable inside its niche.
What changes when you convert SVG to ICO
Both formats are lossless, so nothing is thrown away in either direction — this is a container change rather than a quality decision. What differs is how efficiently each one packs the same pixels, and how widely each is supported by the software you need to open it in.
Transparency survives intact. Both SVG and ICO carry a full 8-bit alpha channel, so cut-outs, drop shadows and anti-aliased edges convert without a white box appearing behind them, and the result still composites cleanly onto any background colour.
The important loss here is scalability rather than quality. An SVG is drawn fresh at whatever size it is asked for; the moment it becomes a ICO it is a fixed grid of pixels, and enlarging it later softens the edges. Rasterize at the largest size you will realistically need, and keep the original SVG — it remains the master copy.
ICO cannot exceed 256×256, so anything larger is scaled down to fit while keeping its aspect ratio. Work from a square source if you can — a wide image gets letterboxed into the square, and fine detail disappears entirely at the 16-pixel size a browser tab actually renders.
A vector is the ideal starting point for an icon, because the shapes were designed rather than sampled and they scale down cleanly. If the logo has fine strokes or small lettering, consider simplifying it in the SVG first: what reads on a business card disappears completely in a browser tab.