How it works is, if you have two files foo.gz and bar.gz, and cat foo.gz bar.gz > foobar.gz, then foobar.gz is a valid gzip file and uncompresses to a single file with the contents of foo and bar.

It’s handy because it is very easy to just append stuff at the end of a compressed file without having to uncompress-append-recompress. It is a bit niche but I have a couple of use cases where it makes everything simpler.