The overall mechanism of an air compressor is a piston or rotary element (e.g. rotary screw or vane) that draws in Water Lubricated Air Compressor atmosphere, which is compressed right into a storage container. Naturally, since the piston or rotary element needs to move consistently and smoothly for this to function, it generally needs to be lubricated.
In a lubricated air compressor, there is lubricating oil which will keep the piston or rotary component running smoothly without damaging the mechanism. The lubricant also really helps to dissipate heat and maintain air compression efficiency.
Oil-totally free air compressors also use a piston or rotary element, however they get around the lubrication problem by coating the compression element with a pre-lubricating materials like 
Teflon. Some oil-free compressors could also use water in place of essential oil for the lubricating and cooling procedure. These alternate materials guard the pump and invite the mechanism to move smoothly with no need for any oil-based or synthetic lubrication.