Many file compression methods can be read while still compressed, just far less efficiently.
Think about writing somthing realy small to save space on the paper, you could read it word by word with a magnifying glass its inefficient but it works. However if your going to need to reference it often then it’s going to be better to transcribe a larger version to another piece of paper.
Another way to save space would be to remove all the spaces and replace commonly used groups of letters such as “ing” with a single symbol representing all 3 letters. With this method you’ve also greatly reduced the space needed to write somthing but it’s going to take you a while to decipher it when you need to read it one day. This represents a file that needs to be decompressed to access
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