Have you ever zig-zagged up a hill to make climbing it easier? It's the same principle. Going straight up is a shorter path but each step is pretty steep. By going up at an angle, the vertical distance you cover with each step is (say) cut in half, and the price you pay is that you have to take twice as many steps. Or imagine lifting a car to change a tire. You end up cranking the handle a thousand times because it's easier to do a thousand easy cranks than one really really hard crank.

/u/WallRunner's explanation was good. Here's the physics behind it.

Forcing the pedal down creates a rotational force (a moment) on the pedal gears. That force is transferred into the chain, which causes a new moment on the wheel gears. Moments are the product of force and distance. For the same moment, if you increase the distance, you decrease the force. You can fiddle with that on the two sets of gears.

Small distance on the pedal gears results in big force on the chain. Big distance on the wheel gear results in big moment on the wheel. The end result is the wheel is easy to turn. Good for starting to move and going up hills. Big moment on the wheel means it won't turn very far, so you have to pedal a whole bunch of times to go whatever distance. A setting like 1-1 on your handles ought to have a small pedal gear and big wheel gear.

Big distance on the pedal gears results in low force on the chain. Small distance on the wheel gear results in small moment on the wheel. The end result is that the wheel is hard to turn. Good when you're going fast, because the small moment on the wheel means it turns a whole lot, so you don't have to pedal many times to cover that same whatever distance. A setting like 3-7 on your handles ought to have a big pedal gear and a small wheel gear.