The compression of an engine is the pressure that is measured through the spark plug hole when the engine is turned (usually by the starter). On the compression cycle of the engine, the piston is at the bottom, and both valves close. The piston rises to the top compressing the air that is trapped. It is a measure of whether there are any leaks in the cylinder. Leaks can occur if the valves are not sealing properly and/or if the piston rings are not sealing properly.
As an engine ages, the forces and temperatures of the combustion process cause wear. Usually the exhaust valves are the first to leak because they run very hot, and oxidation wears the valve seat and valve. The piston rings move up and down against the cylinder walls, and cause the cylinders to slowly enlarge (usually more in one direction causing the bores to become elliptical) so the rings cannot seal properly.
If you turbocharge a worn engine, two things happen. The erosion of the valves accelerates, and combustion gases blow by the rings into the crankcase. This contaminates the oil quickly since the combustion gases are acidic. These gases also pick up oil mist as they escape from the engine wherever they can. This oil usually ends up in the intake via the PCV valve. Also, the engine is down on power compared to a tight engine, and usually runs rougher because all the cylinders are not sealed the same.
Another problem with worn engines is leaking valve guides. If oil leaks into the combustion chamber, it is burned along with the fuel. This has two deleterious effects. It causes deposits in the comustion chamber which can cause hot spots which cause pre-ignition. Second, it lowers the octane of the combustion mixture causing detonation in a turbocharged engine.