One .gz file corresponds to one decompressed file. This is why files are often tarballed first – it’s just easier to deal with a single file than several, especially if you want to retain the directory structure. Raw gzip comes up rarely, but when it does the relevant tools are
gzip to compress and
gunzip to decompress. If you’re dealing with a stream of compressed data you’ll want to use the
--stdout flag with both commands to send the streams to standard output rather than creating intermediate files.