Compressed file vs Archived file

Archived file

An archived file is basically a collection of files and directories stored into one file. You can extract the files and directories out from the archived file. It is one singular file that have all the archived files put into it.

Do note that it uses the same amount of disk space as all the individual files and directories combined, it doesn't do any compression.

Archived file on it's own is not compressed, however, with tar you have an option to add compression to it to make the archived file smaller.

Compressed file

Compressed file is a collection of files and directories that are stored into one file and are stored in a way that uses less disk space than all the individual files and directories combined.