I have an app on my phone which does similar. It is a paint style app and for ages I didn't think it was compressing images because I couldn't see any discernible loss in quality but the file sizes were insanely smaller. But it seems so!

Its like youtube, they have an insane compression algorithm which doesn't seem to hurt the quality too much at all. I often upload my daughters stuff to teams for school after running them up to youtube and then downloading them again. Beats trying to do video compression on my ancient laptop!