tar implementation, likely the
GNU one, is detecting the file passed as a parameter is compressed.
The mostly used
tar implementations these days,
GNU tar and
busybox ones, are looking to the first bytes of the file, a.k.a. magic number, to figure out if it is compressed and the compression algorithm to use.
tar implementations found on commercial Unixes that are based on the original AT&T code do not support the
-z flag in the first place. One notable exception is Solaris 11
tar where this extension has been added, including the ability to detect the file format.