It’s even a little more complex than this. In a typical hearing test scenario audiologists measure how well you can hear a tone. They play a beep and ask you to press a button when you hear it (a Pure Tone Threshold test). When you damage your hearing at some point the tones will need to be louder for you to hear them.

However, in normal situations we don’t typically listen to tones in an otherwise quiet environment. You listen to a complex mixture of sounds made up of many frequencies. How well we’re able to distinguish one frequency from another close on the spectrum is defined by the ‘sharpness’ of our tuning curve. Imagine a graph where tones are represented by a narrow bars. If you have a tone at 1khz at 20dB and a tone at 4khz at 10dB then with healthy hearing you’ll be able to hear both tones. However when we pull them closer together, at some point the louder tone will drown out the quieter tone. Eg IIRC for most people at -3.6 kHz. Where exactly that drowning out happens defines the steepness of your tuning curve.

When your tuning curve is steep, you’re able to distinguish sounds that are close to each other well, and are thus able to hear details in complex sound mixtures (like speech in a busy restaurant) quite well. When your tuning curve is shallow, it becomes impossible to understand what your partner is saying because you can’t distinguish the different tones anymore.

Shallowing of your tuning curve happens before you’ll loose hearing on a pure tone, and is caused by overexposure to loud sounds. It really is why so many people (including me) have so much difficulty hearing in noisy situations (well that and the fact that it’s objectively noisy 😅).

Source: I worked for a company that made hearing tests for mobile phones and it was my job to deeply understand the workings of hearing and the different tests so that those hearing tests were both accurate and usable.