Exactly right. There would be no confusion if the Hutter prize was a competition for compressing human data.

This is a parallel issue to the ones in conversations around understanding. There's a massive gulf between being able to build an ontology about a thing and having an understanding of it: the former requires only a system of categorizing and relating elements, and has nothing to do with correctness per se; the latter is an effective (note: lossy!) compression of causal factors which generate the categories and relations. It's the difference between "Mercury, a star that doesn't twinkle, orbits Earth, the only planet in existence, and we have inferred curves that predict why it goes backwards in its orbit sometimes" and "Mercury and Earth, planets, both orbit the Sun, a star, and all stable orbits are elliptical".