Space compression is an important technical bottleneck of virtual reality technology. In order to promote and use this technology more broadly, the problem must be effectively solved. The causes, characteristics, influencing factors and compensation schemes of spatial compression in VE are analyzed systematically from a cognitive perspective, so as to effectively solve or improve distance compression to enhance fidelity and users' experience and ultimately promote the wide application of VR technology. The methods of literature research and interdisciplinary analysis were adopted to retrieve and analyze a large number of related literatures in cognitive psychology, human-computer interaction and computer science and systematically sort out the characteristics and laws of spatial compression effect in VE. At the same time, the causes for the spatial compression in VE were discussed from the perspective of individual cognition and technology, and based on this, the specific solutions were proposed to reduce the space compression effect and improve the users' experience. Based on the theory of multi-sensory integration, an in-depth analysis is carried out on the mechanism of the distance compression effect. It is proposed that in the cognitive perspective, the users' sense of presence can be enhanced by providing binocular parallax and rich depth cues and the inconsistent environment can be provided in VE to improve the accuracy of distance estimation in VE, thus finally achieving the purpose of effectively solving or improving the distance compression problem.