CLI – If you have a file you want to compress, you have options as to how you will do it. The bzip2 command is one of the options that is open to you on a macOS system. Likewise, if you come across a previously compressed file with the .bz2 extension, you will want to use bzip2 to decompress it.
The description of bzip2 in the macOS man page is:
bzip2 compresses files using the Burrows-Wheeler block sorting text compression algorithm, and Huffman coding. Compression is generally considerably better than that achieved by more conventional LZ77/LZ78-based compressors, and approaches the performance of the PPM family of statistical compressors.
To learn a lot more about how to use bzip2, take a look at “Linux bzip2 Command Tutorial for Beginners (6 Examples)“. Yes, this is a Linux article, but the bzip2 command as implemented on macOS is fundamentally the same. Check the macOS man page for bzip2 for all of the available options.