Normally to decompress and untar a file, you might do the following:

$ bzip2 -d linux-2.4.16.tar.bz2
$ tar xvf linux-2.4.16.tar

The downside of this method is that it requires the creation of an intermediate, uncompressed file on your disk. Since tar has the ability to read directly from its input (instead of specifying a file), we could produce the same end result using a pipeline:

$ bzip2 -dc linux-2.4.16.tar.bz2 | tar xvf -

Woohoo! Our compressed tarball has been extracted, and we didn't need an intermediate file.