Compression shrinks text responses (HTML, CSS, JS, JSON, SVG) by 70–90%. Put this at the http { } level so it applies everywhere.

gzip            on;
gzip_vary       on;          # add "Vary: Accept-Encoding" so caches store both versions
gzip_comp_level 5;           # 1–9; 5 is a good size/CPU trade-off
gzip_min_length 256;         # don't bother compressing tiny responses
gzip_proxied    any;         # also compress responses to proxied requests

gzip_types
    text/plain
    text/css
    text/xml
    application/json
    application/javascript
    application/xml+rss
    application/atom+xml
    image/svg+xml
    font/ttf
    font/otf;

Key points:

HTML (text/html) is always compressed when gzip is on — you don’t (and can’t) list it in gzip_types.
gzip_vary on; is important behind a CDN/proxy so it caches the gzipped and plain versions separately.
Don’t compress already-compressed formats (JPEG, PNG, WebP, MP4, woff2) — they won’t shrink and you’d waste CPU. The list above deliberately omits them. woff2 is already compressed, so leave it out.
gzip_comp_level above ~6 costs noticeably more CPU for little extra savings.

Brotli compresses ~15–20% smaller than gzip but needs the separate ngx_brotli module (not in stock Nginx; included in many distro builds and the official Docker image). If you have it:

brotli            on;
brotli_comp_level 5;
brotli_types      text/plain text/css application/json application/javascript image/svg+xml;

Keep gzip on as well — Nginx serves Brotli to clients that send Accept-Encoding: br and falls back to gzip otherwise.

sudo nginx -t && sudo nginx -s reload

Enable gzip (and Brotli) compression