Compression squeezes your sound, limits it's frequency range, sounds like a receipe for bad tone doesn't it?
I'm sorry but that's not the case.
Compression doesn't affect frequency. It governs the amplitude of your signal by keeping the level within a particular range. It affects the dynamics of your playing.
Simply put, it amplifies weak signals and attenuates loud signals below and above a threshold.
It's used in recording studios to keep the volume of the recording within a range which is audible to the listener and under the distortion threshold, or to emphasise particular parts of the mix without affecting the volume levels.
For guitarists, used right, compression can be very useful. For instance you can pick individual notes and strum chords and keep the subjective volume level similar.
I often play electric guitar clawhammer style with metal thumb and fingerpicks. A bit of compression can add extra emphasis to the attack of the note and is great for separation of individual notes.
Experiment with different settings.
You won't hear much, but you'll start to play differently, and perhaps more accurately.