can damage the rods,crank,bearings but thats extreme case's
basically if the combustion takes place before it should and the rods are dead straight to the crank then the downward pressure is exurted straight through the rod to the crank and then to the bearings and casing
where in a normal scenario the spark plug fires just before tdc and combusts just after tdc forcing the piston down with the crank at a slight angle forcing the crank round rather than just straight down.
hard to explain as im cr&p at English
ok so image 1 is detonation happening and image 2 is normal combustion
and yes reducing compression will solve the problem, then just stick a full system on and remap to gain back the lost HP