XZ is a new free compression file format that is starting to be more widely used. The LZMA2 compression method it uses first became popular in the 7-Zip archive program, with an analogous Unix command-line version called 7z.
Getting that tighter compression comes at the cost of its runtime being about 4 times slower than bzip2, but a bonus is that it decompresses about 3 times faster than bzip2. The combination of significantly smaller file sizes and faster decompression made it a clear win for distributing software packages, leading to it being the format used for packages in Fedora 12.
It’s also easy to use on Ubuntu 9.10, via the standard xz-utils package. When you install that with apt-get, aptitude, etc., you’ll get a scary warning about it replacing lzma, a core package, but this is safe to do because xz-utils provides compatible replacement binaries /usr/bin/lzma and friends (lzcat, lzless, etc.). There is also built-in support in GNU tar with the new –xz aka -J options.