As the name suggest this is about file compression ie, using certain algorithms and methods we reduce the size of the file which can retain more or less all the data so that storing and transfer become easy when they are expensive.
This is one of the easiest encoding technique because we just replace no of time a character repeated consecutively with a number and character for instance
WWWWWWWWWWWWBWWWWWWWWWWWWBBBWWWWWWWWWWWWWWWWWWWWWWWWBWWWWWWWWWWWWWW is replaced with 12W1B12W3B24W1B14W