droste.zip is a ZIP file that contains an exact copy of itself.
This page used to have an interactive explanation, but it is lost to time. Try wgreenberg's version, read Russ Cox's explanation (2010), or make your own with A Generator for Recursive Zip Files (2024)!
I have a weak spot for compression hacks. Here are two good ones:
"Rosetta Flash" An alphanumeric string that is also a valid compressed Flash file.
Encoding Web Shells in PNG IDAT chunks An image file that doesn't have malicious code in it, but does after you PNG-compress it.