As the name suggests, this simple feature allows MDaemon's IMAP server to honour the IMAP compression mode which significantly decreases the amount of data that needs to be transferred during a client to server IMAP session.
Typical compression ranges from 50-90% depending on the data being transmitted but the overall increase in performance is undoubtedly beneficial.
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Unfortunately, not all IMAP clients support IMAP compression so be sure to check your specific client for details. The native Outlook IMAP session doesn't in fact, however ALT-N have addressed this by adding support in the Outlook Connector Client.