A basic hearing instrument amplifies whatever sounds it picks up linearly. The problem with this is that low level sounds will rarely get the necessary boost to make a big difference with linear amplification, and loud noises can become too sharp. Wide Dynamic Range Compression gives more emphasis to softer sounds while calms down sounds that are too loud to make the user more comfortable.
Expansion is used to suppress low level sounds below the defined knee-point to minimize annoying noises such as the hum of your refrigerator or air conditioning unit. A good hearing instrument will use both of these features together to give you the best user experience.