Gzip is a file compression tool that reduces the size of files for easier storage and faster transmission over the internet. It uses the DEFLATE algorithm, which combines LZ77 compression and Huffman coding to efficiently shrink data without losing any information. This makes it particularly useful for web servers and browsers, as smaller files load more quickly. When a file is compressed with Gzip, it typically has a ".gz" extension. Many web servers automatically compress files before sending them to users, improving website performance. Most modern browsers can automatically decompress Gzip files, ensuring a seamless experience for users.