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Compressed tone indicates less dynamics (variation in volume) & more sustain.
If you think of your guitar signal as a wave-form:
Compression clips the peaks off the top and adds gain to the "troughs". This has the effect of evening out the sound volume-wise & adding sustain to decaying notes.
The down-side for guitar tone is loss of control over dynamics and compression often alters the note attack, which some players dislike.
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