The overall mechanism of an air compressor is a piston or rotary component (e.g. rotary screw 
or vane) that draws in air, which is compressed into a storage tank. Naturally, since the piston or rotary element needs to move regularly and smoothly for this to function, it generally needs to be lubricated.
In a lubricated air compressor, there is lubricating oil which will keep the piston or rotary element running smoothly without Water Lubricated Air Compressor damaging the mechanism. The lubricant also helps to dissipate temperature and maintain 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 materials like Teflon. Some oil-free compressors may also use water in place of oil for the lubricating and cooling procedure. These alternate materials safeguard the pump and allow the mechanism to move smoothly with no need for any oil-based or synthetic lubrication.