HTTP content encoding is an incredibly powerful tool that can save you huge amounts of bandwidth and make your web or mobile application faster, basically for free.
Unfortunately, it's poorly understood by most developers. There's a lot of power here, but few people are aware of the options or what "content encoding" really means, so it's mostly left to be handled automatically (for better or worse) by your web server.
In many cases that means no encoding at all. In some helpful cases (typically CDNs or static site PaaS hosts) a useful basic default will be provided, but those defaults are rarely the best choice for every situation.
With just a tiny sprinkle of knowledge, you can enable this and speed up your web application, your API, and all your HTTP requests & responses in no time at all.
This tells the HTTP client that it needs to unwrap the content using gzip, and then it's going find some JSON inside. That's the best way to think of it: if you receive a request or response with a content-encoding header, then you should undo that content encoding (e.g. un-gzip the body) and then you'll find content that matches the content-type header.