bzip2 is a free and open-source data compression program that uses the Burrows-Wheeler transform and Huffman coding to reduce file sizes. It is known for its high compression ratios, making it effective for compressing large files, such as text documents and software packages. The program is commonly used in Unix-like operating systems and can handle various file formats. Users can create compressed files with a ".bz2" extension and decompress them easily. bzip2 is often preferred for its balance of speed and compression efficiency compared to other tools like gzip and zip.