Compressors are used to control dynamic range in musical material. Essentially, youre reducing the difference between the loudest and softest levels, which provides more even sounding output. For vocals, its extremely common to use high levels of compression on a lead track, so that every word can be clearly heard over the music. When taken to extremes, compression can hype the sound, creating an effect unto itself. When related to guitar, compression provides enhanced sustain and attack. Combined with overdrive/distortion effects, you can create very even sounding rhythm or solo sounds. For more information on Compression see: Wikipedia Dynamic Range Compression
Keywords: What is Compression?