COMP does indeed mean compression - and it works just like a pro audio or musicians compressor, i.e. it squashes the dynamic range so that, among other things, you hear all the quiet bits in music better in the far-from-perfect audio environment of a car driving around.
This is especially important with, say, classical music and old album rock; however, today's pop/rock recordings (meaning everything since the 90's), assuming that's what you listen to, are ALREADY so compressed that COMP won't do much for you.
I don't use either AVC or COMP because I'm super-critical of audio and can usually hear them working to the degree that they annoy me - but they're nevertheless cool features.