The general mechanism of an air compressor is a piston or rotary element (e.g. rotary screw or vane) that allures surroundings, which is compressed right into a storage tank. Naturally, since the piston or rotary element needs to move regularly and smoothly for this to work, it generally must be lubricated.
In a lubricated air compressor, there is lubricating oil which keeps the piston or rotary element Water Lubricated Air Compressor running well without damaging the system. The lubricant also really helps to dissipate temperature and keep maintaining air compression efficiency.
Oil-free of charge air compressors also use a piston or rotary element, but they get around the lubrication problem by coating the compression element 
with a pre-lubricating material like Teflon. Some oil-free compressors may also use water in place of essential oil for the lubricating and cooling procedure. These alternate materials secure the pump and invite the mechanism to move smoothly without the need for any oil-based or synthetic lubrication.