The setuptools documentation only states:
For maximum performance, Python packages are best installed as zip files. Not all packages, however, are capable of running in compressed form, because they may expect to be able to access either source code or data files as normal operating system files. So, setuptools can install your project as a zipfile or a directory, and its default choice is determined by the project's zip_safe flag (reference).
In practical terms, what is the performance benefit gained? Is it worth investigating if my projects are zip-safe, or are the benefits generally minimal?
Zip files take up less space on disk, which also means they're more quickly read from disk. Since most things are I/O bound, the overhead in decompressing the packaging may be less than the overhead in reading a larger file from disk. Moreover, it's likely that a single, small-ish zip file is stored sequentially on disk, while a collection of smaller files may be more spread out. On rotational media, this also increases read performance by cutting down the number of seeks. So you generally optimize your disk usage at the cost of some CPU time, which may dramatically improve your import
and load times.