The Wii uses a proprietary file system called WBFS. Converting an ISO to WBFS removes dummy data (empty padding used to push data to the faster outer edge of the disc). This can shrink Sonic Colors to roughly 3.5 GB . This is legitimate, lossless compression.
For those seeking the best performance without the risks of unofficial compression: Sonic Colors: Ultimate : This modern remaster for Nintendo Switch, PS4, and Xbox One is roughly sonic colors wii highly compressed