Why minify HTML
Minifying strips comments and collapses unnecessary whitespace so the browser downloads fewer bytes. On a large page this can meaningfully shave load time, which matters both for user experience and for Core Web Vitals, a set of page-experience signals Google uses in ranking.
What this specific tool actually removes
HTML comments are stripped entirely, whitespace sitting directly between two tags is collapsed to nothing, any run of multiple spaces elsewhere is collapsed to a single space, and all newlines are removed - a straightforward set of text-level passes rather than a full HTML parser rewriting the document structure.
A real limit worth knowing before deploying minified output
Because whitespace and newlines are stripped everywhere in the document as plain text, content inside a <pre> block or a <textarea>'s default value - where whitespace and line breaks are meant to display exactly as written - can have that formatting altered along with everything else. If your page includes preformatted code blocks or pre-filled textareas, check that section of the minified output carefully, or exclude it from minification and handle it separately.
Why minifying is a build step, not a source-editing step
Keep your actual working HTML file readable and commented, and only run it through minification as part of deploying - treating the minified output as a build artifact, not something you edit directly, since any future change would need to happen in the original source and be re-minified afterward.