Question: I was just wondering, what's the difference between these file formats? Shouldn't there be just one or two that generally tend to perform superior to most others?

Answer: 
[`compress`](http://en.wikipedia.org/wiki/Compress) (the Unix command, ported to Linux and others) itself only has one file extension that is used for its output, and that is `.z`

There are other compression algorithms (and their associated programs) that compress files differently for different results.

Some popular programs include:

* [Gzip](http://en.wikipedia.org/wiki/Gzip) which has the extension `.gz`
* [Bzip](http://en.wikipedia.org/wiki/Bzip2) which has the extension `.bz2`
* [Rar](http://en.wikipedia.org/wiki/Rar) which has the extension `.rar`
* [Zip](http://en.wikipedia.org/wiki/ZIP_%28file_format%29) which has the extension `.zip`
* [7-zip](http://en.wikipedia.org/wiki/7z) which has the extension `.7z`
* and many more...

Generally newer archivers will use better compression algorithms, usually at the cost of taking longer (requiring more CPU time) to compress or requiring more memory or both. 

As a general rule though, the newer the program, the newer it's algorithms and therefore the better its compression will be. `compress` is as old as the hills and its compression ratios tend to be a lot worse than more modern programs like 7-zip.
If its linux based, .tar.gz or .tar.bz - otherwise known as your humble tarball. In windows, .zip - natively supported since windows XP. You also often encounter .rar (especially with files from slightly dubious sources) and .7z (windows/open source software most often).

If you want to be ABSOLUTELY sure your file will be opened by most modern OSes (and some not so modern ones), .zip is the safe choice. 

Efficiency depends on the filetype in many cases - for example lrzip works best with VERY large files, text files always compress very well, but compressed audio dosen't, and compression ratio is often traded off for processor and ram usage- as such, there is no 'best' file format for compression