On a whim, I decided to compress a PS1 game that was in bin/cue format to chd. To my surprise, it boots and plays in retroarch, no problem. Is there any reason why I shouldn't do this to all my games and save a ton of space?
As long as the emulators you are using support them, there's really no downside.
The data track is compressed, while the audio tracks are changed to lossless FLAC. There is a small amount of overhead to decompress while you play but any modern system should handle that this ease.
If you want to play on original hardware you'd like need to convert back to bin/cue to be able to burn to a CD, and AFAIK the Xstation and PSIO don't support CHD.