Data compression reduces the number of bits needed to store or send video by removing redundancy within a frame and between successive frames. In a camera system, the codec and its quality setting decide how much detail survives, and how the file behaves when it is exported and reviewed later.
Compression is why a camera can record for weeks on a disk that would hold hours of uncompressed video. It is also the step where fine detail is lost first.
How video compression works
A codec stores a full frame, then describes later frames by their differences, and it discards detail the eye is unlikely to notice. Motion, grain and complex texture cost the most bits. Higher compression saves storage and bandwidth but can leave blocking around fast movement.
Choosing a codec and quality
H.264 is widely supported, and H.265 produces smaller files at similar quality for a higher processing cost. The quality setting matters more than the codec name: a low setting on a new codec can look worse than a moderate setting on an older one. Check the result on real footage.
Related:Glossary: NVRGlossary: VMS