It is lossless, and comes with a search tool (called pi-vss-recall).

It summarises the context, but doesn't touch the full conversation history. At the end of compacted context, there is a small note that tells the LLM to use pi-vss-recall to search for a specific keyword if needed.

I tried it out thinking it would suck, but I've been compacting this way for over 6 months now and I am not going back. Somehow, magically, it works great for me at least!