When I bought my first "IBM"-compatible computer, it came with a 500MB hard disk. Applications back then didn’t hog as much space as they do now, but storage still became an issue, hence the advent of the Archival Utility. Taking that 700k MIDI file down to 500k was significant savings, plus the ability to "bundle" several files together was handy.
Both of those uses still exist, but the latter is the more common use for an archival util in modern times. 1.5TB hard drives are under 140 USD, so saving that few k’s of drive acreage isn’t as much of a concern. I work with a lot of projects that are ‘sets’ of files that work together, so I find myself using archivers all the time. Back in the day, I used WinZip, which has become far too "feature-heavy" for my liking. I used WinRAR for a time, but it wasn’t quite my speed, either. My friend Scott from AppsPlus recommended 7-zip, so I gave it a try.