Jaundice is a symptom, not a disease and there are many reasons for it happening. It is recognized primarily by the yellow discoloration of the skin.
In the womb, baby does not breathe but rely on a high level of red blood cells to receive enough oxygen from the mother. After birth, the extra red cells are broken down. One of the waste products is a substance called bilirubin which is fat soluble (unconjugated bilirubin) that is, it dissolves in fat. This bilirubin must be taken to the liver to be changed into water soluble bilirubin (conjugated bilirubin) which is then passed out through the urine, stools and sweat.
If for some reason the fat soluble bilirubin is not converted, it will attach itself to fatty tissues that it comes into contact with, mainly in the skin and brain. If too much bilirubin attaches itself to fatty tissues in the brain it may cause brain damage.
Physiological jaundice is due to the above process and is the most common. It usually appears on the 3rd day and disappears by 7th day. It is not dangerous as long as the bilirubin level does not go up too high.
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The preterm baby is more likely to become jaundiced because of an immature liver which cannot cope with the high load of bilirubin.
