I use the recommended compression (LZW) often, especially after installing a lot of new mods. Yes, it does work, it's very reliable, and it really does compress very efficiently, not 50%, but more like 30-40% (100GB uncompressed, about 34GB compressed). For my sim PC, I have an i7 processor with Windows 10, and AC is installed on an SSD. In this case, because the compression is part of Windows and relies on the CPU, the compressed files seem to load slightly faster, but not so much that it's that significant. However, around 600GB of files compressed to about 240GB, that's the real benefit (and this is on a 500 GB SSD). If someone experiences longer load times with compressed files, it may be a hardware or other issue that's affecting it.
I also remove extra files, like Photoshop templates, and keep those on a larger HDD drive, where I keep all the original compressed mod files, as has been recommended by others.