What dynamic compression is
As drivers and voice coils heat up, electrical resistance changes and acoustic output stops increasing proportionally with input. Mechanical limits can also restrict further movement. The result is compression: the soundtrack asks for more, but the loudspeaker gives less.
Why cinema reveals it
Film sound has sharp peaks. A speaker may sound excellent on dialogue and music at moderate level but lose scale during explosions or dense effects if there is not enough headroom.
Distance makes it worse
Long listening distances require more output at the loudspeaker. That is why commercial-cinema-style horns and high-sensitivity systems become attractive in large rooms.
Amplifier clipping is a separate limit
A loudspeaker with plenty of capability can still compress subjectively if the amplifier clips or its protection circuits engage first. The system limit is whichever component runs out of headroom earliest.
Design below the limits
A reference system should meet its target peaks without spending normal operation at the edge of thermal, mechanical or electrical limits.