Ah semantics. I get messed up with that a lot too, especially when talking with people about depth of field. I know what I mean but when I talk to someone else they get the reverse meaning due to the words I use. I say "increased" depth of field to refer to the effect of it becoming more visible in a shot. Where everything from 3' to 5' is in focus and everything else is out of focus. But to pretty much everyone else increasing DOF means to go from F1.8 to F16 as opposed to the other way around thereby "decreasing" the amount of image that is out of focus.
Anyway, in this case you are right the way I am hearing you. Lower comression results in less compression being done to the file and therefore less damage to the image. James probably just had it in his head that setting the Compression option in Photoshop to 3 instead of 10 would be severely damaging to the image, which is true. However it is JUST a setting number, more of a quality setting. Higher number = better quality = lower compression.
Cheers!
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