Everyone needs to preserve disk space in order to fit more files on their computer. The only solution is to squeeze those files down to a smaller size. Compressed files allow you to do that. Compressed archive formats allow you to squeeze all those files into a single archive.
There are a lot of compressed files types, such as .ZIP, .RAR, .TAR, .CAB, and .ARJ and the reason for this is because several compression algorithms can be used to compress those files.