It absolutely is compressed (think about it, if it were not, it would be the same size as the original) BUT..every bit which is removed is replaced when it is played back unlike lossy compression inwhich files never return to the original state and are forever molested. So why might there be a difference in sound? The most obvious reason would be the increased processing which needs to be performed on the file in order to restore it to the original uncompressed format.
It is subtle but it comes across as a reduction in the relaxed nature of the musical presentation. As I stated earlier, when ;istening the car, I am not privy to the effect, but in either of my 2 home systems, I can (on most songs) readily identify the lossless file. I have some songs which I was absolutely unable to hear a difference, but not many. I suggest you perform a head to head test and determine for yourself. It is interesting, one thing is certain, Apple did a really good job with their compression algorithm, but for ultimate fidelity...uncompressed all the way.