The document discusses Huffman encoding, which is a method for data compression of text documents. It uses a binary tree to assign variable-length codes to each letter in the original message, with more frequent letters receiving shorter codes. This allows the message to be compressed by encoding it with the Huffman codes rather than standard 8-bit ASCII codes. The algorithm works by first listing each unique letter and its frequency, and then combining the two least frequent letters into a node, repeating this process until a full binary tree is constructed with a single root node.