The modern usage of it adds compression, which you have to undo first before doing your archive operations ;)
Zip was > tar (and cpio) in that regard because you didn't have that two step process and only had to have enough spare disk space for the extracted file, rather than extracted file + decompressed tar
Each file being compressed individually means low compression rates, the deflate overhead might be acceptable for slow mediums (although in that case the memory overhead would be non-trivial).
Tar -> read, skip, read, till you find what you need, compression doesn't change much, as most stream compression algorithms have a flush method.
I expect you meant "downside", because when talking about file compression, a "massive downsize" sounds like a good thing :-)