File Compression techniques are based on the fact that most computer files are fairly redundant. It simply takes up too much hard disk space, you can use file compression to reduce its size. Windows Vista lets you reduce the size of your archived files through its compressed folders feature. The compressed folders are actually .ZIP format files compressed with the LZW algorithm. LZW is an adaptive, dictionary based on algorithm. This redundant letter patterns are identified as the file is processed; as the process continues, it adapts to find more redundant letter patterns.
Redundant letter patterns are removed from the original text and placed in a dictionary. Each pointer refers to a distinct letter pattern in the dictionary and compressed file contains only non redundant patterns. When the file is uncompressed, the pointers are replaced by the original letter pattern. This process of restore the file to its original condition, with no data loss is also called as Lossless compression.
