Developer website: Scott Kendall
So what Apple did was they implemented a compression system mechanism into the window server. When a window's contents haven't changed for a given period of time, the window server compresses them, so they take up less memory. Since it uses a compression method that doesn't require the buffer to be fully decompressed to do compositing, you won't notice a slowdown with this compressions turned on.
In fact, because less memory is being used up by the window buffers, more RAM will be available for your applications, which means less virtual memory paging, and possibly a speedier machine.
*Previously available here