Typically volume of a track is chosen by the producer/person mixing. You could theoretically get an average volume and scale the tracks gain. This could have the effect of compressing or chopping parts of the song that are purposefully loud while the rest of the song is purposefully quiet.

This is exactly it. Well, this and I'd say the fact that modern digital volume controls evolved from previous analog volume controls where you were literally just adjusting how much the input signal was amplified.

But, back to the "this" - they have similar automatic compression options built in to a lot of AVRs too, often called something to the effect of 'night mode' or 'midnight mode', but they completely destroy the directors intention ... take for example, a 'scary' movie with jump scares - the people are supposed to be whispering and somewhat hard to hear, making you strain to hear them, to increase the impact of the loud jump scare - if you compressed that enough (extreme example), you could probably take all the 'scare' right out of it. Varying volume within a single track/album/movie/show/etc., is intentional, and more often that not you would not want to compress that.