I think you’re confusing two different concepts, dynamic range compression and data compression.

The first is like an automated volume control that lowers the volume really really fast in a matter of ms when the volume reachest a certain threshold, (can also work the other way where in increases below a certain threshold, or both).

The reduces the file size, sacrificing quantity if a lossy codec is uses. Lossless codecs like flac are a bit to bit perfect of the original.