When animating, it’s important to remember the volume and mass of the object you’re animating in order to ensure it seems believable. The principle of squash and stretch helps with this.
When an organic object moves it’s not completely rigid, it deforms slightly, so if an organic object within an animation doesn’t do this it’s movements seem wrong. In order to achieve this it’s important to flatten (squash) or elongate (stretch) the object.
The same can be said about man-made objects within an animation, but they are slightly more rigid, therefore shouldn’t have the same amount of squash and stretch as an organic object.
The squash and stretch can also be exaggerated to make the scene more appealing and ensure the viewers have a chance to process the actions fully.