Jitbit's bat to exe converter reads a BAT-file from disk, compresses and encodes the BAT-file contents and adds a special "loader" to it, saving the resulting file as an EXE.
When the EXE-file is launched, the "loader" decodes and decompresses the batch-commands and sends them to the operating system one by one. The decompression is performed on the fly, without any impact on the execution performance.