Why shrink game assets
Players give up on big downloads. On Google Play every extra few megabytes costs installs, and web games lose players for every second of loading. Most of that size is art and sound saved at settings meant for editing, not shipping. A sprite saved as a full color PNG can usually be cut by more than half with no change you can see, and a WAV music track is about ten times larger than a good MP3.
How images are compressed
Smart palette. Game sprites rarely use more than a few hundred colors. The compressor finds the best 256, 128, 64 or 32 colors for each image, keeps transparency, and saves an indexed PNG. If an image already has few colors, such as pixel art, it keeps every color exactly, so nothing changes at all. Lossless keeps every pixel and only re-packs the file. WebP and JPG trade a little quality for much smaller files, useful for backgrounds and photos. JPG has no transparency, so use it only for opaque images. Max size scales down textures that are larger than they are ever shown, and pad to power of two adds transparent space so width and height become 256, 512, 1024 and so on, which some older texture compression needs. Drag across the preview to compare before and after.
How sounds are compressed
Long sounds are treated as music and become MP3 at the bit rate you choose. 128k is a good default for game music. Short sounds are treated as sound effects. They stay WAV by default, because WAV starts playing instantly with no gap, but they are trimmed, made mono and saved at a lower sample rate, which often makes them five to ten times smaller with no change you would notice on a phone speaker. MP3 works in Unity, Godot 4, GameMaker, Unreal and every browser. If a music track has to loop with no gap at all, test the MP3 loop in your engine, since MP3 adds a few milliseconds of silence at the start.
Is anything uploaded?
No. Every file is decoded, compressed and packed in your browser. Your assets never leave your device, which also means there is no upload wait, even for big folders.