Zip File
A zip file is a folder compressed into one file, and it is the format WordPress expects when you upload a theme or a plugin by hand.
In plain English
Buy a premium plugin and you download a zip. WordPress takes that zip, unpacks it into the right folder, and the plugin appears in your list.
The mistake almost everyone makes once is unzipping it first and then trying to upload the folder. WordPress wants the zip, not what is inside it.
Why it matters
Everything you buy rather than install from the WordPress directory arrives this way, so it is the gateway to every premium theme and plugin.
It is also how you move things around: exported settings, template kits and site migrations all travel as zips.
How it works
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You download the zipFrom wherever you bought or exported it.
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You upload it in WordPressPlugins, Add New, Upload Plugin. Themes work the same way.
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WordPress unpacks itInto wp-content, and checks it looks like a plugin or a theme.
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You activate itUploading and activating are two steps, and stopping between them is fine.
Some downloads contain more than the plugin
A purchase often gives you a bundle with documentation and licence files. If the upload fails, look inside: the plugin is usually a zip within the zip.