tar, which stands for tape archive, was used for tape backup in the ol' days (still is used for this also), but it is mostly used now for archiving many files for transfer, making a bunch of files into one. However, they are not compressed, that is where gzip comes in. That is what actually compresses the files. As MGMorden stated, you can type tar xvzf filename to unzip and untar the files in one command, the z switch is what tells it that it needs to be unzipped.