File compression is used to reduce the file size of one or more files. When a file or a group of files is compressed, the resulting "archive" often takes up 50% to 90% less disk space than the original file(s). Common types of file compression include Zip, Gzip, RAR, StuffIt, and 7z compression.
Similarly one may ask, what is the purpose of a compressed file?
File compression is a process of "packaging" a file (or files) to use less disk space. Compression software allows you to take many files and compress them into one file, which is smaller than the combined size of the originals.
Why would you use a ZIP file?
The Zip format is the most popular compression format used in the Windows environment, and WinZip is the most popular compression utility. Zip files compress data and therefore save time and space and make downloading software and transferring e-mail attachments faster.