This term is used primarily to describe methods of encoding or data compression that retains all of the original information. A common example of this is the "compressed folder" in computer file systems. One example of this type of encoding is the FLAC file format (Free Lossless Audio Codec). Another is the DVD-A (audio) format which utilizes the Meridian Lossless Packing (MLP) system to compress audio data.
The total amount of compression using a lossless method is limited when compared to lossy compression.
Please see data compression for more detailed information.