Works well. Infact it reduces the total size of the code causing it to be downloaded faster.
Mootools uses it as it's as a compression package choice for the mootools build (this build is then used on your website).
When it all comes down to it, this packing methodology uses eval (big surprise). This can lead to some issues since the actual evaluated solution is not cached by any browser and therefore needs to be executed each time the page is loaded. The underlying code itself looks like a handful, but for mootools (which has a huge amount of source code), my browser seems to execute the evaluation perfectly fine and with no stress.