oh.Yes, you can use something like the above to compress your NSP files. However, this is only good for compressing the NSP files themselves. Once you install a game using the NSP file, it will be decompressed during the installation process. In other words, there is no space gain on the Switch itself when the game is installed.
Nope. It is already as small as it can be when installed. Why do you need to?oh.
Is there any way to make the installed file smaller?

Unless there happen to be unused assets/language files to remove then no.oh.
Is there any way to make the installed file smaller?