I'd guess it's similar to using a lot of English words to make compound nouns, except it is slightly worse to read, so if the word is new you'd usually slow down a bit to properly parse it.

On the upside, you don't have to guess where the compound noun ends end the rest of the sentence starts, which can also cost time or cost confusion.

It's not a big deal if you know each individual word but if you don't then it's hell.

i learned a bunch of German years ago, and while i don't really know what the particular components mean, it's pretty easy for me to decompose the word into parts. do you see a "ge-" or a "be-"? its probably the beginning of a verb; an "-ung" or "-eit" are usually noun endings; etc. and this happens pretty much subconsciously