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The reason for that is rather surprising, but PNGs are basically zipped BMPs with an optional filter step to arrange the pixels in a way that compresses better.
And that's why if you give it a photo with lots of details, it's not very effective and just gives you a rather big file. PNG barely does anything compared to JPEG and other formats. That's also why it's great for small things like icons: it decompresses fast and still manages a fairly good compression ratio when a good chunk of the image is transparent or flat background.