confused on maximum characters

Hey guys,

I'm a little confused by the documentation on varchar data type in postgresql.

Looking at the docs Peter Eisentraut added this note at the bottom of the documentation for character data.
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The maximum value for "n" is 2147483648. The longest possible string is actually only about 1 GB, though. The storage size of "(4+n)" is actually incorrect: char(n) really takes 4+n but varchar(n) and text take 4 plus the actual length of the stored string. Long strings will actually be compressed by the system, though.
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So does this mean I can specify very large varchar column types, like say varchar(1024)?

And what does he mean by 'Long strings will actually be compressed by the system'?

Thanx.

Roy.