If you are processing emails for security reasons, and want to find viruses even if they are in archive files, it's easy to write the code to "just keep unarchiving until we're out of things to unarchive", but not only can that lead to quite astonishing expansions, it can actually be a process that never terminates at all.
I remember when I first read about these, and "a small file that decompresses to a gigabyte" was also "a small file that decompresses to several multiples of your entire hard disk space" and even servers couldn't handle it. Now I read articles like this one talking about "oh yeah Evolution filled up 100GB of space" like that's no big deal.
If you have a recursive decompressor you can still make small files that uncompress to large amounts even by 2025 standards, because the symbols the compressor will use to represent "as many zeros as I can have" will themselves be redundant. The rule that you can't compress already-compressed content doesn't necessarily apply to these sorts of files.