Wikipedia
Lempel–Ziv–Storer–Szymanski (LZSS) is a lossless data compression algorithm, a derivative of LZ77, that was created in 1982 by James Storer and Thomas Szymanski. LZSS was described in article "Data compression via textual substitution" published in Journal of the ACM (1982, pp. 928–951).
LZSS is a dictionary encoding technique. It attempts to replace a string of symbols with a reference to a dictionary location of the same string.
The main difference between LZ77 and LZSS is that in LZ77 the dictionary reference could actually be longer than the string it was replacing. In LZSS, such references are omitted if the length is less than the "break even" point. Furthermore, LZSS uses one-bit flags to indicate whether the next chunk of data is a literal (byte) or a reference to an offset/length pair.