Data compression is a feature which is used to reduce disk storage space and increase the performance of the query by reducing the I/O operations.
SQL Server 2008 supports two types of compression :
Row-level compression
Page-level compression.
A row-level and page-level compression takes place on the metadata. Page level compression results in persisting certain common data that affects rows in a single location.
The compression takes place into number of bits. For example, the length of ‘varchar’ will be stored in 3 bits.
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