A good way to reduce the size that bulky clothing takes up is to place it into a zip-lock bag and squeeze out the air. The weight will not change, but a bulky sweater will take up less space. Take this concept a step further and you will see the value of compression straps (especially if you bring a sleeping bag).

Some people suggest the vacuum bags, but I think they are only good if you are living in Europe for a few months(not just backpack). I think that the company that makes the vacuum bags is called American Tourister. With these special bags, you just put your stuff (such as bulky sweaters) in these plastic bags, and then suck the air out of the bags with a vacuum. This results in condensing the stuff in the plastic bags into airtight plastic bags which are kind of like bricks. This will allow you to pack a lot more stuff in your luggage without having to struggle to close the zipper/latches.

Just remember that this can result in 2 potential problems: 1) if the airlines/customs make you open anything up at the airport, you will probably not be able to cram that stuff back in your suit case/backpack; and 2) after you live in Europe for a semester or so, you will acquire more crap and you will never be able to return home with it all in your luggage, so plan on leaving some stuff in Europe or paying extra to bring it (or ship it) home.

Finally (and the main reason that I believe that the vacuum bags do not work for people who only backpack (and not live in Europe), how do you expect to find a vacuum at every hostel that you stay at? Once you break the seal on the bag and use the clothes, they will expand and you will need space for that expansion.
Regardless, people still suggest the vacuum bags for backpacking. I just don’t understand why?