Static and Dynamic Compression in IIS7
(via Remote IIS Manager)
This is used to provide file types that do not typically change, included but not limited to *.txt, *.css etc..
This compression refer to the way it is distributed rather than the content type; using dynamic compression means that the compressed content is being generated each time, consuming server CPU and resources. This is used to provide for example pages that changes often such as ASP files.
How to install the proper compression
HTTP compression is usually available on the default installation of IIS 7. However, only static compression is installed by default. To install static or dynamic compression, use the following steps.