What causes receiver desensitization?

Receiver desensitization is fundamentally an RF front-end overload issue. It is caused by an exceptionally strong RF signal that is close enough to your tuned frequency to pass through the receiver's initial bandpass filters (the pre-selector). Once this massive signal reaches the RF amplifier or mixer, it overwhelms the circuitry. The receiver responds by automatically reducing its gain to protect itself and handle the strong signal, effectively making it "deaf" to the weaker signals you are actually trying to hear. Distractors involving squelch or audio gain are incorrect because those are merely internal audio-stage adjustments. Desensitization is a physical limitation of the RF components reacting to intense external RF energy.