Xz is the successor to the lempel-ziv/markov-chain algorithm compression format, which provides memory-hungry but powerful compression (often better than bzip2) and fast, easy decompression.

the native format of liblzma is xz; it also supports raw (headerless) streams and the older lzma format used by lzma. (for 7-zip's related format, use the p7zip package instead.)