xz is a data compression tool that uses the Lempel-Ziv-Markov chain algorithm to reduce the size of files. It is known for achieving high compression ratios, making it popular for compressing large files and software packages. The resulting files typically have a ".xz" extension. The XZ Utils package includes the xz command-line tool, along with other utilities for handling compressed files. It is widely used in various operating systems, including Linux and Unix, and is often employed in software distribution to save bandwidth and storage space.