TL;DR (Too long; didn’t read.)
A File with .ZIP extension is a archive that contains Compressed Data.

Long Overview
ZIP is a very popular archive format widely using in Internet. Introduced in 1989 and developed by Phil Katz and PKWare Inc. Like all other archives, ZIP files are also data containers, they are simply a collection of one or more than one files/folders in compressed form for easily transportation. The most common use of .ZIP is to download software, zipping software or anything that’s going to downloaded by users, saves server’s space, decreases the time it takes for you to download, and keeps hundreds or thousands of files nicely organized in the single ZIP file

This file format belongs to Compressed or aggregate files category

Below listed software supports ZIP file extension

• 7-Zip (Free)
• WinZip (Paid)
• WinRAR (Paid) see this picture
• And lots of others

ZIP File Extension is developed by Phil Katz && PKWARE Inc, Initially Release in 1989, The latest release of ZIP is 6.3.4 launched on 1 October 2014. ZIP is a Open Format File, Open Format means Any software can use ZIP File Extension doesn't matter if its Open SOurce or Proprietary Software. Open Format is also know as Free File Format

application/zip
application/x-zip
application/octet-stream
application/x-zip-compressed

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1. Using any third party software: ZIP File Extension can be opened Manually using any third party software listed above like 7-Zip or WinRar and there are lots of others, that come for free/paid. So, it all depends on your choice. After downloading and installing the software just double click on the ZIP file and that's it.