Smaller file size → Fewer bits → Faster transmission time and reduced internet traffic.
Reduced download time for video, sound (including speech used for VOIP - Voice Over Internet Protocol - systems), and image files.
Streaming is possible as the data can be sent as fast as the rate at which it's played.
Images in web pages appear faster.
Takes up less space on disks/servers.
Files for video streaming are compressed.
The TV or computer needs to decompress the data as the video is played.
Before the video is played, it will buffer a sufficient amount to allow for occasionally slow network.
If the website or server detects slow connection, it may start sending alternatively lower-quality (hence lower file size) files.