EDIT: Adding a few explanations, as per OP request.
The script does verify conditions prior to zipping directories each time a new directory is found by the for loop. Variables have also been eliminated. Let's dissect the code.
The main loop
cd "$PWD/../WorkingDir"
for dir in */*/; do # Ensures to select only directories
compress $dir # compress runs some checks prior to compressing
done
There is indeed not much more to say about it.
The compress routine
local arch="$(echo $1 | sed -rne '/320\/(light|dark)/s@/@_@gp')"
$1 is the argument passed to compressed, i.e. the directory to check and compress. What sed does first ('/320\/(light|dark)/') is check whether the path is of the form
320/light
320/dark
and returns the path with the slash converted to an underscore: 's@/@_@g'. Using the at sign as a separator for readability to avoid escaping the slash. Other valid notations are 's:/:_:g' or 's#/#_#g' or the classical 's/\//_/g'. Note how the slash to transform is escaped with an anti slash. I find the latter form less readable though.
The trailing p works together with sed -n; the latter option in this particular case means «don't echo anything unless told to by p whenever a match (i.e. in the enclosing slashes) is found». Therefore arch will contain a path with the slash transformed into an underscore if and only if the regular expression 320\/(light|dark) is found in the path. Otherwise it will echo nothing, making arch a blank variable.
Option -r is a convenient way to tell sed to use canonical regular expressions, more readable. Otherwise you would need to escape the parenthesis and pipe characters. I find '/320\/(light|dark)/s@/@_@gp' more readable than '/320\/\(light\|dark\)/s@/@_@gp' or '/320\/\(light\|dark\)/s/\//_/gp'.
: ${arch:=file}
This line sets arch to its default value "file" if it is blank. The weird construction is required because ${arch:=file} alone triggers a syntax error. The colon tells the shell to do nothing (:) but assign arch a value if it is blank.
[ -f "${arch}.zip" ] || ( cd -- $1 && zip -0rq "${PWD}/${arch}.zip ." )
Here I used -f instead of -e because the former also checks for zero-length files. The test will succeed only if a ZIP archive exists and has a non zero length.
If there's no archive file in the parent (or the script's current) directory or if its size is null, then the script spawns a sub-shell that changes to the directory passed as an argument to compress and zips its content. Note that variables $1 and $PWD are evaluated before the sub-shell executes its instructions, i.e. $PWD is equal to the parent directory $Z in your initial version.
Expanding the filter
You can act upon sed the following way:
sed -rne '/320\/(light|dark|play)/s@/@_@gp'
to check directory names such as
320/light
320/dark
320/play
You may also consider /(320|480|540)\/(light|dark|play)/, which gives you 9 combinations, or a more generic form /[0-9]+\/(light|dark|play)/ (any number followed by a slash and one of "light", "dark" and "play") or even /[0-9]+\/\w+/ (any number followed by a slash and a word aka [A-Za-z0-9_]+). It all depends how strict or broad you want the filter to be.