In GarageBand iOS, does the "Optimizing Performance" operation induce an irreversible degradation of recorded signals?
Apple is pretty mum on what "Optimizing performance" means, so we only have speculation to go by, but I have noticed a few things and have an idea for you. I have noticed that turning off all reverb and delay effects causes it to happen much less frequently. This would indicate it's some sort of preprocessing or pre-generation to save CPU cycles on playback. The fact that I currently have a 40-minute piece in iOS GarageBand that is taking up 6GB on disk, even though the piece is almost entirely midi tracks and contains no live instrument or vocal tracks, would corroborate that it is storing audio tracks. This is also corroborated by the fact that if I change the tempo, it reliably immediately does an "Optimizing Performance" the very next time I try to play it.

Remember, GarageBand is much more processor-intensive than ordinary audio, because instead of just a left and right channel, it has individual left-and-right channels for every track, which must individually be panned, processed with reverb/delay, etc. So it's entirely possible that it's generating much lower-bandwidth lossy-compression versions of your audio for playback within Mobile GarageBand just to reduce processor load while multiple tracks are playing.

However, based solely on long experience, I would conjecture that it does not reduce the quality of your original audio, but rather, generates a second "optimized" file for use just within the program during playback. I bet if you were to export the entire project to an audio file, your original guitar sound wound be there in sparkling full fidelity. 

If you wanted to test this out and report the results back here, I bet you'd be doing a service to the community and the odd Googler who finds this while hunting down the same question.

Obviously, if I'm right about that, it would mean iOS GarageBand is not an ideal app to do final mixes on, since you can't actually hear what it will really sound like until you export the results. Hmmm... An Apple app that includes a fundamental shortcoming which makes it a less-than-ideal tool for a serious user who wants it to do what they're advertising it for... Could that even be possible? Hmmmm.