The compression you are refering to is archival compression(lossless) that rw uses.
Unless you are reencoding the audio into another compressed audio format there won't be any quality loss.
Why does RW need to compress files when it saves?
Because these is no use of uncompressed raw data for you unless its being used by rw it's to much easier to manage singe file than having multiple files lying around for a project.
Consider an rw song as a big suitcase where you throw your all gear and stuff(audio and other riff data), close it down. and you are ready to go instead of carrying everything required individually
Here is RW way of working out things
At Open : Open the suitcase and neatly arrange and connect all your gear so you are ready to jam in no time.
at save : pack the suitcase into a single entity that is compressed to take less hard drive space.
From what I can tell there's no compression actually happening to the audio files themselves.
The data compression does happen on audio files as well, but to the limit they can be compressed using standard compression algorithm (pkzip in rw case) but as i said above it's lossless atleast for 16 bit audio.
Normally, compression means that information is being thrown out to make file sizes smaller
Actually its the other way around. Before the invention of lossy encoding where you could live with loss of data (such as mp3, mpeg,jpeg etc) , compression was a way of packing the data most efficiently so that at runtime it could be decompressed without losing single bit of data (lossless compression).
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