Every compression tool, including 7-Zip, embeds metadata (file names, headers, and structure info) into the archive. For very small files or folders with complex structures, this overhead can exceed the space saved by compression.
Files that are already highly compressed (like .jpg images, .mp4 videos, or .exe executable images) often cannot be compressed further. Attempting to compress them again may only add overhead.
Some systems use hard links where one file appears in multiple places but only occupies space once. Most archive formats do not support this and will save each link as a separate, full-sized file, ballooning the archive's size.
Using the "Store" level with encryption will encrypt file contents without any actual compression, which may slightly increase the final size due to encryption headers. Issues with "Long Content" in 7z
