[nadaviv]

No, it creates 4x effective transaction space in blocks that can now be as large as 4MB. It does not compress data more efficiently or makes transactions smaller in any way, it is a block size increase in every sense of the word.

The only ones who see this as 1MB block are old nodes that didn't upgrade to a segwit-compatible client. But for nodes that do upgrade, the block is simply larger.

But you're right in that 4MB is the maximum theoretical ceiling. That 2.1MB number I mentioned is what we get according to kind of transactions that we have on the network today. It'll go a bit higher as bitcoin users start using more advanced scripts, but not by much.