Encoders are Cherokee modules that can be used as filters. The most common usage is to compress information allowing you to save bandwidth. You should do that whenever you can since hardware is mostly unexpensive while bandwidth is not. Besides, the performance penalization suffered due to the compression process is trivial, and if the content is cached you will only suffer it once.
Of course it doesn't make sense to apply a processor intensive filter to content that can't take advantage of it (i.e., it doesn't make sense to try to compressed an already compressed file because there is nothing to gain).
You can specify the filetypes to have encoding allowed or denied, and you can select the policy to apply to this encoding process.
Deny by default
Allow by default
Deny, Allow
Allow, Deny
This is the list of currently provided encoders: