Is there anything harder than moving a tile cache from one computer to another? It is hard enough when you have fiber running between two servers, but when you think about copying it up to the cloud? Forget about it!
Exploded is the same format you worked with in earlier versions of ArcGIS Server, in which each tile is stored as a single file.
Compact is the new format. It actually does not zip or compress the tiles in any way; rather, it groups the tiles together in large files called bundles. A single bundle can hold up to about 16,000 tiles. The result is a cache with dozens or hundreds of files, instead of thousands or millions. This speeds copying immensely, and is especially useful in workflows where you use a staging server to create tiles, then move the tiles to a production server.
One thing to remember, if you are reading the ArcGIS Server tile cache outside of ESRI clients (the web APIs and ArcGIS clients) you’ll want to make sure you use the exploded tile cache, otherwise you won’t be able to read the bundles. I haven’t had any opportunity to test performance of these compact tile caches, but there is no reason to suspect that it will be noticeable either way. The big deal will be on uploading them from your local data store to the server/cloud where you want to consume them.
I’m very torn on this, the benefits to the compact tile cache are clear - uploading tile caches takes forever. But yet another proprietary tile service seems a bit much. I suppose you can use ESRI’s APIs to read them but sometimes that just isn’t an option (or a want).