A couple of years ago I looked into the behaviour of the Compress Options, I've recently revisited the topic in response to some recent Service Requests. My list of Communities content on the Compress feature has got a little longer, some updates have been added to the earlier pieces:
What does 'Compress File on Exit' do? I was surprised to find out how little the User Preference 'Compress on Exit' actually does.
Compress Options covers the options available in MicroStation.
How to turn ON/OFF Compress options via Key-in is helpful when running a compress operation with the Batch Processor:
Compress Files by Batch Process Batch Processing using the Compress Commands is a far better approach to purging DGN files than 'Compress File on Exit'.
For AECOsim Building Designer users also read:
Compress Options in AECOSim Building Designer - Behaviour and Configuration
Compress Options can affect Drawing View performance [in AECOsim Building Designer]