When creating tiny-sized and embedded Linux systems, every byte of the storage device (floppy, flash disk, etc.) is very important, so compression is used everywhere possible. Also, compressed file systems are frequently needed for archiving purposes. For huge public archives, as well as for personal media archives, this is essential.
SquashFS brings all this to a new level. It is a read-only file system that lets you compress whole file systems or single directories, write them to other devices/partitions or to ordinary files, and then mount them directly (if a device) or using a loopback device (if it is a file). The modular, compact system design of SquashFS is bliss. For archiving purposes, SquashFS gives you a lot more flexibility and performance speed than a .tar.gz archive.
SquashFS is distributed as a Linux kernel source patch (which enables SquashFS read support in your kernel), and the mksquashfs tool, which creates squashed file systems (in a file or on a block device).
To make further chapters clear, the basic steps of getting SquashFS working that we will discuss are: