I am desperately looking for the answer to following questions:

(1) What is a compressed file system? 
(2) What are the benefits of using the same?
(3) What is compromised to achieve the above benefits? 
(4) Is performance compromised and by how much?
(5) Do the number of processes that can run concurrently on an embedded system, depend on file system?  If yes, why?
(6) Does the Linksys WRT54G has a TFTP server built into its ROM, due to which we are able to port an image into the box using TFTP client application (atftp)?

If anyone has any idea about the above questions please reply back.
Regards
Aditya

(1) What is a compressed file system?
A Filesystem that implements a compression. It is like you zip all your files before saving them.

(2) What are the benefits of using the same?
You will have more free space on this filesystem, so you can save more files/packages.

(4) Is performance compromised and by how much?
Sure compression will use processortime, dont know how much.

(6) Does the Linksys WRT54G has a TFTP server built into its ROM, due to which we are able to port an image into the box using TFTP client application (atftp)?
Yes, and it is activated on bootup if nvram bootwait=on