Following is what I have discovered so far. It looks to me that the fonts will be automatically embedded when I save as pdf, but then why is there an option to embed fonts (albeit greyed out -not available)?
Is anyone willing to share the answer to this question?
Note: Raster data is comprised of pixels. Scanned images are one form of raster-based images. Vector objects are created in illustration and layout programs where the objects are not represented by pixels, but rather by math equations. In Photoshop you can open a scanned image (raster) and add type (vector) and objects. When you save the image as a PDF file, the vector type and objects are preserved.
Embed Fonts: Font embedding will occur much as it does with Distiller. If you create a Photoshop file and preserve the type layer, embedding the font will eliminate another user from needing the font if the file is opened in Acrobat