This might be the most comprehensive post on compression gear on the Internet.
Not exactly.
The compression may impede blood flow to the muscle but the benefits of helping evacuate blood from the muscle are still a net gain. The continuous exertion of a rider with a 'death grip' on the bars or the repeated flexing of the right forearm from a rider who is hard on the brakes often (think TMP, a track with several hard braking zones) will cause the forearm muscles to swell. All of our muscles are encased in inelastic sacs. If the muscle continues to swell it can expand to fill this muscle sac. At this point the swollen muscle itself is what is restricting blood flow. Now your heart is unable to pump as much blood into the muscle to flush it out and you get arm pump.
Proper fitting compression gear acts to prevent this. Blood is supplied to the muscle tissue deeper below the skin, the effects of the compression gear are less pronounced the deeper you go so the effects of external compression while flexing are relatively limited. Once the muscle is relaxed the external compression helps push blood from the tiny capillaries closer to the surface of the skin into the larger faster flowing blood vessels. Given that the time between braking zones is relatively constant, if you can evacuate lactic acid and blood from the muscle faster it is less likely that your muscle will swell to the extent that it fills the muscle sac and restricts blood flow.
Does that help?