This question about zip bombs naturally led me to the Wikipedia page on the topic. The article mentions an example of a 45.1 kb zip file that decompresses to 1.3 exabytes.>
All file compression algorithms rely on the entropy of the information to be compressed.
Theoretically you can compress a stream of 0's or 1's, and if it's long enough, it will compress very well.
That's the theory part. The practical part has already been pointed out by others.