To emphasize my point. Listen to some great source music through good headphones and you will here the full dynamic range of an orchestra as rendered by the source recording. Ultra low background noise allows you to hear the softest passages and their nuance. Since the driver is so close to the ear canal, loud passages are rendered with full dynamics and no compression. No change in Cd player will render different overall dynamics (unless that player is purposefully compressing dynamics, ipods do this).
Now, take the headphones off and increase the volume level so that you can hear the music at conversational levels with the headphones 3 ft away. The overall sound will be high pitched and AM radio sounding. Why? The sound is being compressed by the physical limitation of the drivers in the headphones. All the music, loud as well as soft passages are being played at or near the maximum spl of the headphone. This same characteristic applies to speakers. Hence the more effecient your speaker are, the louder you can drive the max spl without compression. This is also the reason that speakers with large and many drivers can give you great dynamics in a good size room. Little bookshelf speakers (without a sub) cannot, but will, if played at moderate to low volume levels.
