the engines works like an air compressor, the compression is coming out from the pistons. This compression is produced by the detonation or the fuel and air that goes into the piston chamber. Couple the fire from the spark plugs and the proper air and fuel mixture...magcocombust ito and produce a pressure that would push the pistons down. The "push" in an engine will happen alternately in the pistons in the engine (4 pistons for a 4 cylinder engine). This action will drive the main shaft of the engine connected to the transmission....and the turning motion is delivered to the wheels.
BOTTOMLINE, we need equal compressions of all the pistons so that the power delivered will be "balance" or equal. Kung me sira ang piston or the chamber (gasgas for example), magkakaroon ka ng "singaw" sa power...hindi tuloy equal ang power na napoproduce. The effect is a lesser power (horse power) of the engine.
Increasing compression will give powerful power output, increasing the number of pistons will also give bigger power output.
Doing the compression test will allow you to know whether your engine pistons is in the right condition pa. Each engine will have it "standard specification" of compression. Kung off-specs ka you can have poor performance in terms of power and fuel consumption.