The model's job is to predict what comes next. The entropy coder's job is to encode the difference between the prediction and what actually comes next so that the most likely outcome uses as few bits as possible. The more accurate the model is, the less the difference between reality and prediction, the less bits the entropy coder needs and the better the compression.
Simple compression algorithms have simple models, like "if I see the same byte 10 times, the 11th is likely to be the same". But you can also use a LLM as your model, as completing text with the most likely word is what LLMs do.
Here they did the opposite. Instead of using a model for compression, by using a few tricks, they used a compression algorithm as a model: the most likely outcome is when the compression algorithm uses less bits to encode the result. And the original authors have shown that, in some tasks, the simple model that can be extracted out of gzip beats much more complex LLMs.