The Basics of Compression and Caching
When visitors come to your site, their browser displays content that is served from a web server. The web server is told what content to send based on the output of the Joomla application. Each page that the visitor loads requires Joomla to generate content into an html page for the visitor's browser. Sometimes Joomla has to generate the same content over and over. When this happens, site administrators can take advantage of caching to reduce the amount of work required from Joomla and the web server, which can greatly improve performance.
Compression comes into play when the files and data that is generated by Joomla gets sent from the web server to the browser. In many cases, compressing that data can increase the speed at which the data is sent, as well as the performance of the web server itself. In combination, these two factors can greatly decrease the speed at which your pages load for site visitors.