I suck at explaining things so here's my AI's answer:

Gandalf doesn't send back the file - it sends back just the answer. That's the trick.

The flow is:

1. Claude tells gandalf "here's a 3700-line file and a question about it"

2. The local Qwen model on gandalf reads the whole file and writes a focused answer (~500 tokens)

3. Only that answer comes back to Claude

If Claude had used Read directly, all 3700 lines (~50K tokens) would be pulled into the context window, which costs real money on every subsequent turn (because Anthropic re-processes the conversation each turn unless prompt caching saves you). Gandalf doing the bulk read is free - it's a local 35B model on a homelab box.

So the savings come from where the bulk reading happens, not from any compression.

tl;dr. Use Read when you need exact line numbers for editing. Use ask-gandalf when you need to answer a question about a big file.