The purpose of a good romanization is to represent the phonemic distinctions of the language accurately, so that a native speaker who understands the romanization can get the same information from the romanized words as they would from those same words spoken aloud.
For example, if English were just being romanized now (from some other writing system), the romanization would ideally not have any silent E's, double consonants, or other irrelevancies: it would represent the pronunciation accurately, so that a native English-speaker would be able to pronounce an unfamiliar word accurately just from its romanized form. (While Shavian isn't a romanization, it's a good example of how these principles would be applied.)
And indeed, such a romanization would lose information! For example, "your" and "you're" would be written the same in such a system. But the key is, it's clear that English-speakers can always tell the difference from context: after all, spoken English doesn't make any distinction between those words, and we can understand spoken English perfectly fine.
On the flipside, such a romanization wouldn't necessarily represent all the details of the pronunciation in the way an IPA transcription would. For example, it might represent the vowels in "trap" and "bath" with the same symbol, even though some speakers pronounce them differently. Or it might represent the
/k/ in "kit" and "skit" with the same symbol, even though there's an objective difference in pronunciation. The key is that these differences aren't seen as phonemic: they're predictable from the context and don't need to be represented explicitly.
(Many modern romanizations aren't actually perfectly phonemic; it's a balance. But that would be the ideal.)
So while a good romanization can indeed lose information, and can indeed fail to represent all the details of pronunciation, the key is that it contains the same information as the spoken language. Since languages tend to be spoken first and foremost, with writing as a secondary concern, this is generally considered the ideal.