What is Time Compression?

[Sephiroth]

Ultimecia compresses the time when she makes time periods one time period.

Ultimecia exists in her own present but is already with her consciousness in two time periods (meaning her past which is the present of our Squall also becomes her present while she also exists in her own present) since she can control the power inside of Edea which is given to her by another existing Ultimecia who died and this way she can transfer her consciousness to another time period. Make that another time period with Ellone's ability (send consciousness to a body in a past time period, but the person can notice, like Laguna, Kiros and Ward do) and she can exist in three time periods which all become her present at the same time while they are her past and future from a certain point of view when it comes to time periods. The idea is simply to have "power over more time periods" and so she automatically fuses them.

Ultimecia just hates all existence. She wants to be the only thing which exists. And what you see in CD 4 and when the story is about to end is not the full time compression. The full time compression would mean the end of the story but they were able to stop her.