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ARJ was one of the dominant archive formats in the DOS era, competing with PKZIP and LHA in the late 1980s and early 1990s. It offered features ahead of its time: multi-volume spanning (split archives across multiple floppy disks), archive comments, and decent compression. Bulletin board systems (BBS) distributed shareware in ARJ archives.
The format lost the compression wars to ZIP and RAR by the mid-1990s. Windows 95's built-in ZIP support was the final blow — when the operating system handles one format natively, competitors struggle to survive. ARJ's creator, Robert Jung, maintained the software into the 2000s, but new users effectively stopped adopting it.
You'll only encounter ARJ files in retro computing contexts: old BBS archives, vintage software collections, and DOS game distributions. 7-Zip extracts ARJ files. On Linux, the `arj` package handles extraction. There is genuinely no reason to create new ARJ archives.