It was the first compression method for ISO. It was created so that more memory space can be saved. Booster created the first code; it was later optimized for better compression. Other formats tried to replace it by fixing up certain issues such as lag in games, such as .DAX and .JSO. However at the time, the popular application homebrew "DevHook" used CSO. .DAX needed another loader, and .JSO was basically unused.
CSO provides nine levels of compression. While the highest levels of compression can introduce slowdown and lengthy load-times in software which relies heavily on disc streaming, even the lower levels are capable of substantial compression. This is partially due to the data layout of a UMD, though more frequently due to the use of Dummy Files as both an anti-piracy tool and a means to more optimally lay the data out physically on the disc.