If a gravity wave had a sufficient amplitude to significantly compress or stretch a distance from 1 km to 1 mm as it passed through an area of spacetime, it would indeed have profound effects on objects and matter within that region. However, it's important to note that such gravity waves with such extreme amplitudes are not commonly observed or predicted by current scientific understanding.
In general, gravity waves, also known as gravitational waves, are ripples in spacetime caused by the acceleration of massive objects. These waves propagate outward from their source and are extremely weak by the time they reach us. The gravitational waves detected thus far have amplitudes on the order of fractions of a proton's diameter, resulting in minuscule distortions in spacetime.
If a gravity wave were to have an amplitude that causes a significant compression or stretching of a distance, it would induce significant strains and stresses on objects within its path. These strains could potentially be destructive, leading to structural deformations, breaking apart of materials, or disruption of delicate systems.
However, it's important to reiterate that such extreme gravity waves are purely hypothetical at this point. The gravitational waves detected and studied by scientists are typically very weak and do not have significant direct destructive effects on objects they encounter.