Well let's see. We know that the world of FF8 has laws different than our world. That also probably means, different math, sciences, and other things. Therefore, any math and science from our world may most definitely be invalid in the FF8 world. Therefore, Time Compression is compressed time, with no thorough explanation in the game.
I think of Time Compression as just a strong magic, a strong form of sorcery... because, well, that's what it is. Ulti is a sorceress, using sorcery to compress time. If you want to figure out Time Compression so bad, can you figure out the rest of the magic spells in the game?

Fantaseh.