Earlier quoted context omitted.
Yes, because that means the knock sensor is reducing compression because it senses lower octane gasoline.
Compression is fixed by the engine design. The only thing the ECU can do as a result of knock sensor input is retard ignition and close the throttle (and, on a turbocharged engine, lower charge pressure). Retarded ignition does result in lowered gas mileage, but throttling down does not. It just decreases your maximum available power. Plus, if you notice the decrease in power, your driving is not suitable for compari…
The maximum possible compression is, yes, since it is determined by the size of the cylinders and the piston stroke.
But retarding the timing amounts to reducing the effective compression--basically you are wasting some of the compression that's available by delaying the spark until the cylinder has started expanding again. I should have made it clear that it was effective compression that I was talking about.