They aren’t actually compressing something that already exists, they’re creating a file that tricks the decompresser into creating a lot of files out of nowhere.
Like imagine you have instructions for creating a book, and the instructions read, “put a 1 on each page, and print a million pages”
You don’t actually have to have an existing million page book to write those instructions, the decompresser/book maker will follow those instructions anyways. The (instructions for making a book/zip file) is really tiny, but the end result is huge.
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