Originally posted by Matthew Saville like the compressed NEF Nikon files that I've been using for years now, can still retain almost all of the image quality of a raw file, amazingly, at almost the filesize of a JPG file
It's probably because it uses JPEG compression. JPEG is actually an organization that publishes a variety of compression algorithms, but discrete cosine transformation is the technique that produces such high compression ratios at the expense of losing information recorded by the camera. Fractal compression is the only other compression technique that can match DCT for compression ratios and it is also a lossy compression method. The big problem with lossy compression is when you compress a decompressed image (such as saving edits or resizing the image), you almost always end up with ugly artifacts. If you don't need to do any post-processing out of camera, just save your images as JPEG.
RAW files are commonly compressed with a lossless technique such as the LZW algorithm, which can only get close to 2:1 compression. But RAW files compressed with lossless compression can be decompressed and compressed endlessly without any loss of information and without producing unintentional artifacts.