By default Windows stores your files uncompressed so you can work with them. There are times; however; when it is helpful to compress them to save space; for example if you want to send to someone else via email as an attachment. You can also include multiple files into a single compressed folder creating what is called an archive or a zip file. This is helpful when you want to share several files; you create a single archive or compressed folder with all the files and share just one the file rather than the individual files.
There is one small thing to watch out for when working with compressed files. If you double click a compressed folder Windows will automatically uncompress it and show you the files in a new File Explorer window. The files in this window will look like normal files; the catch is Windows has uncompressed the files into a temporary space and once you close the File Explorer window they will disappear. The original compressed folder will still be there so you can always get the files back but some programs do not work well with these temporary uncompressed files. To avoid this you should extract the contents of the compressed folder rather than double click it.
To create a compressed folder select the file (or files) you want to compress, right click, select the “Send To” menu, then select “Compress (zipped) folder”.
To extract the files out of a compressed folder, select the folder (it is really a file), right click, and select “Extract all…” A new window will open asking where you want to extract the files to; you take the default location or select a new one. If you leave the “Show extracted files when complete” box checked Windows will automatically open a new window showing the files you just extracted so you can start working with them.
For those wondering why compressed files are called zip files and people use the terms zip and unzip to mean compress and uncompress read the history of PKZip.