RAR was great at the time because it offered "solid" archiving like a tar/gz combo. Zip and ARJ both compressed at the file level rather than the archive level.
No. You may be thinking of gzip, a spiritual successor and replacement for the Unix compress/uncompress (and even earlier pack/unpack).
But both ZIP and ARJ, and the earlier ARC, all made multiple-file archives.
Or did you mean that the compression was “carried over” from file to file inside the archive?