If there is one part that is really loud, then the overall level of the whole song must be reduced to keep the loud part from red-lining and distorting. If the song's dynamics are squashed so there are no loud parts, then the whole song can be loud. In the earlier days of the vinyl industry, the challenge was to find a way for one record to be louder then another on a jukebox, so it would get attention and sell more. For this reason, listening to classical music or jazz on the radio is sort of pointless, since that is the music that is supposed to have some excitement and dynamic range. It is also part of the reason why radio stations have never played many cassettes, because the tape hiss in the quiet parts and between the songs gets boosted.
Compression makes music more palatable, like white bread.
The most sought-after producers and mastering engineers use compression endlessly in what they do, and when I read the audio magazines, it is THE major topic of discussion. It seems to me that it is pointless to use the finest mikes and recording gear in the world to record real, living music, and then squash it flat as a pancake before it is released to the public. As a musician, there is a non-stop pressure on me to compress my recordings. Though it is an artificial and unnatural alteration of the music, it does have its advantages. If you listen to music in the background at a low level, then when it is compressed, there will not be loud parts jumping out and startling you, nor will there be quiet parts that fall out and become inaudible.