When searching for a single file in a large archive, it uses method 1, which you can see using strace:
open("dataset.zip", O_RDONLY) = 3
ioctl(1, TIOCGWINSZ, 0x7fff9a895920) = -1 ENOTTY (Inappropriate ioctl for device)
write(1, "Archive: dataset.zip\n", 22Archive: dataset.zip
) = 22
lseek(3, 943718400, SEEK_SET) = 943718400
read(3, "\340P\356(s\342\306\205\201\27\360U[\250/2\207\346<\252+u\234\225\1[<\2310E\342\274"..., 4522) = 4522
lseek(3, 943722880, SEEK_SET) = 943722880
read(3, "\3\f\225P\\ux\v\0\1\4\350\3\0\0\4\350\3\0\0", 20) = 20
lseek(3, 943718400, SEEK_SET) = 943718400
read(3, "\340P\356(s\342\306\205\201\27\360U[\250/2\207\346<\252+u\234\225\1[<\2310E\342\274"..., 8192) = 4522
lseek(3, 849346560, SEEK_SET) = 849346560
read(3, "D\262nv\210\343\240C\24\227\344\367q\300\223\231\306\330\275\266\213\276M\7I'&35\2\234J"..., 8192) = 8192
stat("rand-28.txt", 0x559f43e0a550) = -1 ENOENT (No such file or directory)
lstat("rand-28.txt", 0x559f43e0a550) = -1 ENOENT (No such file or directory)
stat("rand-28.txt", 0x559f43e0a550) = -1 ENOENT (No such file or directory)
lstat("rand-28.txt", 0x559f43e0a550) = -1 ENOENT (No such file or directory)
open("rand-28.txt", O_RDWR|O_CREAT|O_TRUNC, 0666) = 4
ioctl(1, TIOCGWINSZ, 0x7fff9a895790) = -1 ENOTTY (Inappropriate ioctl for device)
write(1, " extracting: rand-28.txt "..., 37 extracting: rand-28.txt ) = 37
read(3, "\275\3279Y\206\223\217}\355W%:\220YNT\0\257\260z^\361T\242\2\370\21\336\372+\306\310"..., 8192) = 8192
unzip opens dataset.zip, seeks to the end, then seeks to the start of the requested file in the archive (rand-28.txt, at offset 849346560) and reads from there.
The central directory is found by scanning the last 65557 bytes of the archive; see the code starting here:
/*---------------------------------------------------------------------------
Find and process the end-of-central-directory header. UnZip need only
check last 65557 bytes of zipfile: comment may be up to 65535, end-of-
central-directory record is 18 bytes, and signature itself is 4 bytes;
add some to allow for appended garbage. Since ZipInfo is often used as
a debugging tool, search the whole zipfile if zipinfo_mode is true.
---------------------------------------------------------------------------*/
Best Answer
The Zip format compresses each file separately, and then combines them (with a directory of archive contents) into a single archive file.