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Technical question: What are .lz files? Is this LZMA compression? If so, why not using the more popular .xz format?

Here's why: http://www.nongnu.org/lzip/xz_inadequate.html

tl;dr: Because apparently some people believe that not only can they afford to exclude some users by avoiding zip's, but they must also bike-shed some more.

That seems like a well thought out article

I'm not sure but probably because it produced a smaller file than xz.

It seems that https://en.wikipedia.org/wiki/Lzip came out at the time between lzma and xz, possibly because lzma lacked proper file headers and checksumming at the time.

These days, some distros use lz and most use xz, probably mostly due to historical reasons.

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