zip compression does work for digital picture files, but it depends on which format.
It won't compress files that are already compressed, e.g. jpg files. It can work for uncompressed TIFF files. In many cases, if you try to compress an already compressed file, the resulting file can end up larger than the original.
Lossless means entirely that: you can decompress the compressed file and end up with the exact same file as the original, bit for bit. In fact, on some (enterprise) storage systems, data may be compressed and de-duplicated without you the user ever knowing.