Lossy files sacrifice data for brevity. Lossy files can be very small relative to their original versions and they get smaller by throwing away musical data. The smaller they get, the more data is lost. Streaming services hope you won't notice what's missing, like the grocer who puts his thumb on the scale.
The most famous of the lossy files, MP3, allows data storage and transfer of music files with relatively low space and bandwidth. Without MP3 the entire iPod and portable music player phenomena would likely never have existed.
It's perhaps accurate to suggest 99% of all music enjoyed by billions of people around the world is heard through the lens of an MP3 (or similar) lossy container. Uncompressed files, even losslessly compressed files, are not the norm. Not even close.
What's the point of accepting loss of data in your files, and who cares?
The answer to the first question gets fuzzier nearly every day. Originally, the point was storage and bandwidth restrictions. There simply wasn't enough storage and streaming/download bandwidth to go around. Now that has changed, at least in first and second world countries, with third worlds catching up quickly. So, why are we still so concerned with compressing data? Cost is one answer. Regardless of what's available, it still costs money to store and send data around the world. That's likely to always be true.
And as to the second question, who cares. I can tell you without reservation billions of music lovers around the world don't care about loss of some fidelity, and likely they're unaware there was anything to lose in the first place. The small handful of folks like you and me that do care appear as anomalies to those in charge of data storage and transmission. It's likely we don't even make a blip on the radar.
Except... and that's what we'll cover tomorrow.