Suppose your midi instrument, say a piano vst, has 16 "layers". When you input a note at velocity "1", you'll hear a very quiet ppp note. When you input the same note at velocity "127", you'll hear a very different sound, both louder (fff) and of course with a different timbre or tone, as well. (Because the instrument vst has 16 layers, and let's assume that these "layers" approximate different levels of force applied to the keys of real piano.)
Here's the issue: how do you KEEP the same velocity range (1-127) but reduce the range of VOLUME within which this velocity range operates? Reducing the volume (cc7) doesn't do it, because that just makes ALL velocities quieter. What I'm trying to do is, for example, to keep velocity "1" the same, but as we move up the velocity layers, to end up with a quieter velocity at "127". You get all the same changes in timbre that velocity "layers" provide, but now with a narrower range of loudness or volume.