This rule triggers when PageSpeed Insights detects that the images on the page can be optimized to reduce their filesize without significantly impacting their visual quality.
Images often account for most of the downloaded bytes on a page. As a result, optimizing images can often yield some of the largest byte savings and performance improvements: the fewer bytes the browser has to download, the less competition there is for the client's bandwidth and the faster the browser can download and render content on the screen.
Finding the optimal format and optimization strategy for your image assets requires careful analysis across many dimensions: type of data being encoded, image format capabilities, quality settings, resolution, and more. In addition, you need to consider whether some images are best served in a vector format, if the desired effects can be achieved via CSS, and how to deliver appropriately scaled assets for each type of device.