| swiss 998,
try to imagine what the suspension would do with no fluid in the forks / shock, just springs. The bike would 'bounce' up and down on the springs - like your misses on a mattress.
The purpose of the fluid in the suspension units is to 'dampen' this bouncing, so that it is much smoother, and hence make the bouncing motion less pronounced.
In addition, as the suspension moves it forces fluid through a small aperture, the size of which is adjusted by the screws that adjust rebound and compression damping. The greater the aperture, the more readily the fluid flows and hence the less the 'damping'.
Slight adjustments in either compression or rebound will only really be noticed under extreme riding - e.g. hard braking, or accelerating hard out of a corner etc..... | 
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