There are three interwoven concepts that constitute toxic compassion.
Victim culture: Victimhood is a status symbol. It's a way to get attention and sympathy. And victimhood lets you avoid responsibility and justify questionable behavior. Victims can do no wrong, as they are the ones who have been wronged. Even if they do something wrong, it's not their fault-- it's the fault of the person who wronged them originally. And if there is anything unequal about the world, it is the fault of the oppressor.
Safetyism: Being nurturing and compassionate is not a bad thing. But when these instincts metastasize away from your own family and take up root in the world at large, it becomes a problem. When you view others as needing your nurturing, you become overprotective and overbearing. Munchausen syndrome by proxy is when a mother fakes that her child is sick to get attention. She may even poison her child intentionally to make them sick. The most aggressive form of safetyism is when you invent problems in the world that need your nurturing and compassion. This may be done to consolidate power, or to gain social status.
Performative Empathy: Empathy is a good thing. But if it prevents you from seeing or speaking the truth, it is not empathy. Performative empathy is making a show of caring about people or issues in order to appear virtuous and gain social status. Another common instance is supporting policies that are superficially compassionate, but actually cause more harm than good.
The most general case of toxic compassion is overcompensating to avoid hurting people's feelings, especially the feelings of a group that is perceived as a victim. To avoid hurting this victimized group, we end up reorienting our entire society around their beliefs. We change the definition of words to perpetuate the idea that they are victims and to support their worldview. We change our educational system and social norms to avoid the appearance of offending them.
And what's all the more pathological is that the people who are most vocal and supportive of these changes are not even members of the victimized group. They are people whose maternal instincts have metastasized to the point where they are looking for injustices to correct, even if they have to invent them.