It does, though I once used that trick to create a file containing more "Hello, World" lines than there are atoms in the universe. By, hmm, quite a large factor. It probably isn't a serious concern.
It still fit on a floppy disk. :)
It still fit on a floppy disk. :)
The compression finally finished after 3h (on an old MBP), "dd if=/dev/zero bs=1m count=1m | gzip | gzip | gzip" yields a bit under 10k (10082 bytes), and adding a 4th gzip yields a bit under 4k (4004 bytes). The 5th gzip starts increasing the size of the archive.