Unlike the Windows/DOS based file systems (FAT, FAT32,NTFS) and most UNIX filesystems(ufs,ext2), a file stored
the within the Macintosh filesystem (HFS or HFS+) can have two components: a data fork and a resource fork.  The data
fork is where the changable data is stored while the resource fork holds information such as fonts, menus, and icons.  Files
are not required to have a resource fork.  Because of its dual nature (and the singular nature of the rest of the file systems of the
world), Macintosh encoding utilities must store both forks into a single file.  Compression reduces the size of the
file and does not always store both forks.  Most archived (ftp sites) Macintosh files are both compressed and encoded.

Since early in 1996 the Macintosh has had at least two disk image formats.  These formats allowed you to copy floppies
on a hard drive for later replication.  Well, someone came up with a great idea to allow "virtual floppies" and mount
these disk images in memory.  Both Aladdin (using ShrinkWrap) and Apple (using DiskCopy) allow for virtual floppies, which
now can be of any size.

What does that extension mean?

Aladdin Stuffit Archive (.sit, .sea) - By far the most popular compression format for the Mac.
Macbinary (.bin) - By far the most popular encoding technique.
BinHex (.hqx) - An older encoding scheme that takes up more space than Macbinary.
Apple DiskCopy (.smi, .img, .image) - Virtual Floppy format from Apple.
ShrinkWrap (.img) - Aladdin Virtual Floppy.
Compact Pro (.cpt) - An older compression format.
Zip (.zip) - The most popular PC based compression format.
Gzip(.gzip, .gz) - GNU freeware zip format.
Tar (.tar) - Unix Tape Archive, old time compression.  Still used in conjuction with gzip on Unix boxes.
Other Misc (Arj, Arc, LHA, etc) - Don't worry about them...

Note that the endings can be combined and a file with (.sit.hqx) as and ending has been both
compressed using Stuffit and encoding using Binhex.
 

What You Need:

Use Stuffit Expander (version 5.12 at the time of this writing) to expand/decode almost any compression/encoding combinations
that can be found for the Mac (even PC stuff like zip).  Just drop your file onto Expander and it should do the rest.  Stuffit
Expander also handles ShrinkWrapped Virtual floppies.  If it ends in (.img) and Expander reports and error, you should try
DiskCopy.  If you want to compress your data, you should use DropStuff (5.12) which is shareware unless you already own a prior version.
Some programs (such as the ftp client Fetch) will automatically encode uploaded files using Macbinary or Binhex.  If you run into some format
you don't understand take a look at  Slug's Other Mac Compression archive and take a guess.

But wait a minute, how do I get Expander which itself must be encoded?  Fetch, as well as IE and Netscape Navigator, know how to
decode Macbinary files.  Expander is stored in Macbinary format so aslong as you download it using one of these (or have an
older copy of Expander) you shouldnt have a problem.