The thing here is that wthout G4, what Luffy would do was stretch its muscles first (thus incresing their elastic force), then use CoA to harden the attack (which makes the attack hurt more). The CoA, while increasing the damage, did not increase the force of the attack. And it would be impossible to stretch it after using CoA because the haki made his muscles a lot more stiff and they didn't have enough elasticity to handle any further stretching.
G4 is basically a way to break that barrier and allow Luffy to stretch after using CoA, not before. With his muscles filled with air, their density is reduced, so they become more elastic. Although CoA increases the stiffness of the material, that is balanced by the lower density of the muscle itself, which creates room for stretching that wouldn't be possible before, by allowing more room for the muscle tissue to compress. And as it turns out, stretching a muscle that is harder due to CoA allows for a much higher potential energy, which in turn increases the actual elastic force of the attack by a higher ratio than it would if Luffy were just hardening a muscle that has already been stretched. Not only that, but it allows his body to be "rubbery", like Dofla said, taking hits by stretching like it usually would pre-timeskip.
Of course, if Luffy is going for a higher stifness, then he will be required to employ a higher force in order to stretch his muscles in the first place. Luffy is using an amount of force he has never used before to make that possible. Expect G4's downside to be because of that.
Tl;DR: Gear 4 is a way of using CoA's to maximise power by hardening without sacrificing elasticity, but it requires the user to employ a bigger force.