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I would roughly say that understanding is compression and application is decompression.

You don't memorize the specific details, you memorize the flow of systems. But you get back to the details to put things into practice.

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I was speaking in the context of humans. When someone teaches you, the content coming from the teacher is very compressed. One decompress it when they can generalize and apply it. So understanding is compressed, but is not the act of compressing. I mean it is not compressed from a larger data or made by compressing a larger data. The larger data it represents never existed. It is like the definition of a fractal...
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> I was speaking in the context of humans.

So was I.

> One decompress it when they can generalize and apply it.

Generalizing is compression. Generalizing and applying are very different things.

> So understanding is compressed, but is not the act of compressing.

Understanding (noun) is compressed. Understanding (verb) is the act of creating understanding (noun) and is compression.

> The larger data it represents never existed.

The larger data is everything you take in about the subject. Experience and instruction.

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>creating understanding (noun) and is compression.

What is it compressing from?

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examples
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