Squinting helps us to seperate the lights from the darks and allows us to see larger relationships. You’ll need that for judging composition, values and shapes.
If you want to judge the value of a given color you’ll sometimes have a hard time doing so because color distracts us from the value. But when you squint your eyes, the color will fade just enough to be able to judge the value. Values at both ends of the value scale – white and black – and those close to it can be judged easily with open eyes. But for the values in between it is very helpful to squint your eyes to lose the color information just enough to be able to see the value.
When you want to judge a shape or composition you’ll easily get distracted by the smaller shapes and mid values. Squinting seperates the lighter areas from the darker areas. The light mid values will melt together with the light values and the darker mid values will melt together with the darks. In the end you’ll have an image with about three or four values instead of eleven (as in the Munsell value scale).