Compression refers to the process of reducing the size of data files in order to save storage space, decrease transmission times, and improve overall performance. This can be achieved through various techniques such as lossless compression, which preserves all data in its original form, and lossy compression, which sacrifices some data in order to achieve greater reductions in file size. Compression is used in a wide range of applications including image, video, audio, and text files, as well as in data transmission over networks.