Squatting in displacement hulls: The speed of a wave through the water is dependent on its wavelength. Longer wavelength, faster speed. So a displacement hull will push through the water, creating a bow wave, a midships trough, and a stern wave. As one might expect, the waterline length of the boat is the determinant of the wavelength of the wave it creates. And that won't change unless you rebuild the boat longer, of course. This is the basis of the "theoretical hull speed" of displacement craft. Planing hulls don't have this limitation, as they are able to climb over their bow wave, and leave the rest of the wake behind, skimming across the water.
So, adding power to a displacement hull will eventually cause it to hit that theoretical hull speed, again determined by its waterline length. If you add more power beyond this speed, the waves the boat is causing really can't go any faster. The boat may increase speed just a small bit. But that propulsive energy must go somewhere, so as you try to exceed the hull speed, the energy is transmitted into higher amplitude of the waves. Essentially, the bow and stern waves get higher, and the midships trough lower. This can seem as if the stern is squatting. I once saw a diagram illustrating this effect, and I swear it was in my Grandfather's old Chapman's, but I thumbed through the book and couldn't find it. Essentially, the diagram showed a ship with large bow and stern waves, and an unsupported midsection, and stated it could lead to hull damage.
As for a planing hull, the tilt of the motor is generally set such that it pushes the bow up, presenting less wetted surface area and drag, maximizing speed from a given horsepower. However, with too much trim, pushing the bow up, gravity can pull the bow back down, causing "porposing," especially evident in very calm water.
