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Comment by OkayPhysicist

The "squashing function" necessarily is nonlinear in multilayer nueral networks. A single layer of a neural network can be quite simply written a weight matrix, times an input vector, equalling an output vector, like so

Ax = y

Adding another layer is just multiplying a different set of weights times the output of the first, so

B(Ax)= y

If you remember your linear algebra course, you might see the problem: that can be simplified

(BA)x = y

Cx = y

Completely indistinguishable from a single layer, thus only capable of modeling linear relationships.

To prevent this collapse, a non linear function must be introduced between each layer.

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