Well, first thing you gotta understand is that when the piston in a cylinder comes up towards the HEAD, it compresses the air/fuel ratio. This is known as compression and the (in easy words) amount of compression done is known as Compression Ratio.
This can be increased by shaving the engines HEAD, by changing the pistons and by varying the thickness of the Gasket.
The General rule is, more compression, more power but it has its own problems also. The higher the compression the higher the octane rating of fuel you will need to prevent pre-ignition (Because of more heat).