File compression is the process of reducing the size of one or more files by encoding their data more efficiently. This makes files easier and faster to store, transfer, or share over networks. Compression can be lossless, preserving all original data, or lossy, which removes some data to achieve higher size reduction, sometimes affecting quality. Common uses include compressing documents, images, videos, and software to save disk space or speed up uploads and downloads. Popular compression formats include ZIP, RAR, and MP3.