Every stitch pulls the fabric towards its two ends as the thread tightens. Across a satin column, that pull drags both edges inward, so a column drawn 4 mm wide sews at maybe 3.6 mm, and a border that should meet a fill leaves a line of fabric showing instead.
Pull compensation widens the shape slightly before stitching so the sewn result matches what you drew. It is applied to the geometry, not to the fabric, which is why it is a digitizing setting rather than a machine one.
Pull compensation fixes a shape that sews narrow. It does not fix fabric that moves: if the whole design drifts, or an outline lands beside its fill rather than on it, the problem is underlay, stabiliser or hooping. Adding compensation on top of a moving fabric just makes everything fat.
There is also a push side to it. Long stitches push the fabric ahead of them, so the end of a long satin column can bulge past where you drew it. Splitting the shape or reducing its length helps more than any compensation setting.