Size of source image: 13,504 bytes. Gzipped Sxz image: 8,129 bytes. 5375 bytes less for about 60% of the original size. Webp in a quick test stores the image at 10,894 bytes. Clicking on the letters above shows how the pixels are organized to save space. Homogeneous colocated pixels allow for really good data compression as shown with the letter 'L'. The file size savings are mostly due to not saving the white background pixels and not having a transparency channel. This Sxz image is not rectangular, the white background is literally not stored. The Google sprites are about 21K in size and also would compress well as the Sxz format is intended for icons.

So why not convert raster images to SVG? The problem with SVG is that converting from raster to vector causes an alteration in the pixel details. SVG doesn't store single heterogeneous pixels well. Clicking on the curved border areas of the letters shows the heterogeneous pixels grouped into data chunks. SVG would not be able to save these pixels as a raster format like PNG does. Many logo and button image designers like to have exact control over the pixels in their output at every resolution. The benefit of a hybrid vector format is that it can remain pixel perfect (lossless) to the original.

Image courtesy of Google, this page has no connection to Google Inc.