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A tar.gz file is a format that includes compression of a tape archive. In a way, this is a combination of two file types. Here, TAR forms a tape archive, though TAR by itself does not compress the archive. The compression in this case is achieved by using the gzip algorithm, forming a tar.gz file. This file format is most commonly used on UNIX, Linux, and similar systems.
While tar.gz is an efficient format, it is sometimes expedient to convert it to the ZIP format. This is largely because the ZIP format enjoys a wider acceptance and compatibility, particularly on Windows systems. So, the conversion can make it easier to export the file to a Windows system and work on it.
It is generally seen that a TAR archive is much better at maintaining file permissions than ZIP archives, especially in the case of complex directory structures. That said, in most cases, a carefully optimized conversion to the ZIP format will not affect file permissions.
Speaking purely in terms of compression ratios, a tar.gz file can often be more efficient than a ZIP archive. As such, when a .tar.gz file is converted to the ZIP format, the resulting archive can have a somewhat higher file size.