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From The Collaborative International Dictionary of English v.0.48:

Compression \Com*pres"sion\, n. [L. compressio: cf. F.
   compression.]
   1. The act of compressing, or state of being compressed.
      "Compression of thought." --Johnson.
      [1913 Webster]

   2. (Computers) reduction of the space required for storage
      (of binary data) by an algorithm which converts the data
      to a smaller number of bits while preserving the
      information content. The act of compressing [3].

   Note: Compression may be lossless compression, in which all
         of the information in the original data is preserved,
         and the original data may be recovered in form
         identical to its original form; or lossy compression,
         in which some of the information in the original data
         is lost, and decompression results in a data form
         slightly different from the original. {Lossy
         compression} is used, for example, to compress audio or
         video recordings, and sometimes images, where the
         slight differences in the original data and the data
         recovered after lossy compression may be
         imperceptable to the human eye or ear. The JPEG
         format is produced by a lossy compression algorithm.
         [PJC]
.

From The Collaborative International Dictionary of English v.0.48:

JPEG \JPEG\ n. [Acronym from Joint Picture Experts Group.]
   (Computers)
   A standardized format for storing graphic data in binary
   computer files, allowing over 16 million different colors. It
   allows for lossy compression, i. e. the compression of data
   into a form which re-expands into an image close, but not
   identical to the original image. Files stored in this format
   usually carry the extension jpg or jpeg. Compare GIF.
   [PJC]
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