JPEG compression is a lossy compression technique that exploits human visual perception. It works by:
1) Splitting images into blocks and applying the discrete cosine transform (DCT) to each block to de-correlate pixel values.
2) Quantizing the resulting DCT coefficients, discarding less visible high-frequency data.
3) Entropy coding the quantized DCT coefficients using techniques like run-length encoding and Huffman coding to further compress the data.
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