The University of Waikato, New Zealand has had a lot of research going on to use compression for named entity tagging (name, location, date, person, ...) etc.<p>While it's not the best-performing paradigm for text sequence tagging, it is intellectually intriguing as you say because of the parallel between the concepts "compression" and "understanding", even in the human brain. If we can't understand s.th., we need to memorize it; if we understand it, it doesn't need much space or cognitive load at all, basically a name that is well-linked to other concepts.