The high-energy-level dynamic compaction method is widely used in various foundation treatment projects, but its reinforcement mechanism still lags behind the practice. In view of this, a three-dimensional fluid–solid coupling dynamic analysis model was established on the basis of the FDM–DEM coupling method. The variation trends of crater depth, soil void ratio, vertical additional dynamic stress, and pore water pressure during the process of dynamic compaction were analyzed. The results indicate that the curvature of the crater depth fitting curve gradually decreases with the increase in strike times, tending to a stable value. The initial particle structure is altered by the huge dynamic stress induced by dynamic compaction. As strike times increase, the soil void ratio decreases gradually. The vertical additional dynamic stress is the fundamental reason resulting in foundation compaction. Precipitation preloading before dynamic compaction can improve the reinforcement effect of dynamic compaction, making up for the deficiency that the vertical additional dynamic stress attenuates rapidly along the depth direction. The simulated CPT results illustrate that the modulus of foundation soil can be increased by 3–5 times after dynamic compaction. The research results can provide important reference for similar projects.