Tar is the standard. It's pretty easy to produce and consume tar archives on Unix-like systems (especially in a streaming fashion, which comes in handy if your storage is scratch storage is slow/tiny for some reason), and a lot of software will just work with it.

Other than that, tar is still frequently used for packing data to be recorded onto LTO tapes (even despite LTFS being a thing).

Tar is not a compression algorithm, it is a format for serializing files, so it covers a different use-space.

I've used it often to speed up transfers of many small files over SSH - scp always took a small amount of time before sending each file, and with many files, the wasted time blew up. Serializing all those files with tar and deserializing them on the other side turned out to be much faster, especially since tar works in a stream-like fashion. And it's convenient to type, too:

    tar -c path/to/file1 path/to/file2 ... | ssh user@host tar -x

TAR makes multiple things into one thing, so that repetitions in those things will cause compression gains. Not sure how the other compression algos work, but at least when gzipping, you will not gain that compression, if the repetitions are in separate files. So first TAR then gzip has been the standard way of doing it.

If you need or want to use tar and compression, you can consider pixz. It's compatible with xz, can do multithreaded compression and decompression, and can efficiently extract a single member from a .tar.xz archive without having to decompress the entire archive. xz/pixz is much more computationally expensive than zstd or gzip but also provides better compression ratios.

What would you use instead of tar?