This lecture covers the concept of lossless data compression, which aims to reduce memory space and transmission time by removing redundancy in data. Examples of compression algorithms like SMS language and Morse code are discussed, emphasizing the importance of being able to recover the original message. The process of minimizing the number of bits required to represent a message is illustrated using the example of sending a message from Ibiza. Different encoding strategies, such as using ASCII extended code and optimizing bit usage based on the frequency of letters, are explored to achieve efficient compression.