Can someone tell me what compression does, it's on my amp and besides make notes louder does it do anything?
It reduces your guitar's dynamic range. Basically making soft notes louder and loud notes softer, like a normalizer.
I'm not sure about on an amp, but in the studio a compressor is used to reduce peaks in a signal. If the signal goes over a set threshold then the compressor reduces the gain by a certain amount [the amount being what the ratio is set to]. It then adds make up gain/output gain to make the signal louder after compressing, because compression reduces the volume.

So it's probably something similar.
By crook or fist I'll lather up your gracious smile.
And take my time...