  We use cosmological simulations to study a characteristic evolution pattern
of high redshift galaxies. Early, stream-fed, highly perturbed, gas-rich discs
undergo phases of dissipative contraction into compact, star-forming systems
(blue nuggets) at z~4-2. The peak of gas compaction marks the onset of central
gas depletion and inside-out quenching into compact ellipticals (red nuggets)
by z~2. These are sometimes surrounded by gas rings or grow extended dry
stellar envelopes. The compaction occurs at a roughly constant specific
star-formation rate (SFR), and the quenching occurs at a constant stellar
surface density within the inner kpc ($\Sigma_1$). Massive galaxies quench
earlier, faster, and at a higher $\Sigma_1$ than lower-mass galaxies, which
compactify and attempt to quench more than once. This evolution pattern is
consistent with the way galaxies populate the SFR-radius-mass space, and with
gradients and scatter across the main sequence. The compaction is triggered by
an intense inflow episode, involving (mostly minor) mergers, counter-rotating
streams or recycled gas, and is commonly associated with violent disc
instability. The contraction is dissipative, with the inflow rate >SFR, and the
maximum $\Sigma_1$ anti-correlated with the initial spin parameter, as
predicted by Dekel & Burkert (2014). The central quenching is triggered by the
high SFR and stellar/supernova feedback (possibly also AGN feedback) due to the
high central gas density, while the central inflow weakens as the disc
vanishes. Suppression of fresh gas supply by a hot halo allows the long-term
maintenance of quenching once above a threshold halo mass, inducing the
quenching downsizing.
