Unzip refers to the action of decompressing, expanding, inflating, etc. files that have been compressed by one of the many compression algorithms. Many systems have built-in compression/decompression utilities but not all, and no program will handle all formats.
A good MS-Windows zip/unzip program is 7Zip.
Another option for decompressing image files is bzip2
For a review of the technology, you may want to read Wikipedia's article on the subject and its