Compression is encoding of digital information in order to store it using fewer bits. It can be loss-less, in which all of the original information can be decoded to its original state, or lossy, in which some information is discarded as part of the encoding process. Compression/decompression can occur as a standalone operation (static to disk) or on-the-fly (in memory) at a potential performance cost, as compressed data must be decompressed in order to access it.
Some examples of compression are:
- that built into image or raster data formats (ie jpg or lzw compressed tiff files)
- database compression (note this is different than compaction)
- data compression for the purpose of transmission (zip files)
See Wikipedia for more information: http://en.wikipedia.org/wiki/Data_compression