This article is from the Mac communications FAQ, by Bruce L Grubb BruceG6069@aol.com with numerous contributions by others.
The term tarball originally refered to a tar (Tape ARchiver) file. As
its full name suggests tar was designed to group files together for
a tape archive. As a result the format is very simple containing only
the files themselves and a header that give directory and other key
pieces of information. As such the format itself had no compression
capabilities on its own and so people would compress tar files which was
known as feathering (partly for euphony reasons but this also refers
the method used to cutdown resistance on propellers and oars)
Today the term is also used to refer to a compressed tar file (ie
you compress the tar file into a ball).