What is shown here is the LZ77 [1] factorization of a string. Compression in general works by exploiting redundancy in the source, and natural language is highly redundant, since many words repeat often. Hence the factors in the factorization often look like frequent words or n-grams.
A recent line of research is grammar compression, which tries to turn a text into a tree of rules that generate that text. While still not very good at general-purpose compression, the generated tree are much more interesting than the LZ77 factorization, since they "discover" something that looks like a syntactic parsing of the string, finding syllabes, words, phrases, sentences...
In Craig Nevill-Manning's Ph.D. thesis [2] introduction there are several examples of the inferred grammar of pieces of text, music, fractals, source code, etc... While the algorithm presented there (Sequitur) is now kind of obsolete, the thesis is very interesting because it makes some considerations with a linguistic perspective.
[1] http://en.wikipedia.org/wiki/LZ77_and_LZ78
[2] http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.5.1...