Compared to many of the other effects found on a recording studio rack, the effect of a compressor is subtle. Setting up the controls and then flipping the "Bypass" switch might reveal almost no audible difference. However, when mixing multi-track audio, compressing each part separately before mixing them keeps the boundaries of each part clearly defined. This allows you to precisely position each sound in the mix without the sound bleeding into other channels.
All compressors have a "Threshold" control. The threshold sets the volume level when the compressor is initially triggered. The threshold scale usually is represented as a volume or gain figure in decibels. Set the control to +1db, and any sounds louder than this will be compressed. Anything lower than +1db will remain unaffected. Turning the threshold into the upper end of the scale will produce very subtle effects. Setting it in lower regions of the scale will cause it to process almost everything in the signal.
The "Ratio" control refers to the overall "amount" of compression. It is represented, for example, as 2:1, 4:1 or 10:1. Mathematically, the ratio represents the quantity of gain reduction applied to a peak, compared to the overall volume of sound. Set the threshold, then adjust the ratio control while watching the gain meter. The gain meter on a compressor resembles a volume VU meter, only the lights start at the top and extend down instead of coming up from the bottom. This represents the volume reduction being performed by the compressor. Subtle compression will appear as one or two lights occasionally flickering at the top. Harsh, dramatic compression can fill the whole gauge.
Multi-band compressors are used extensively in mastering. Once other mixing is complete, a multi-band compressor often is applied to the master output to balance the different sections of the frequency range and maximize the volume before a track is cut and printed. Multi-band compressors can be thought of as multiple -- usually four -- compressors in a box. Each one focuses on a different section of the frequency band. There is a compressor dedicated to bass frequencies, one for low-mid ranges and so on. They allow you to apply degrees of compression to each section of a track, emphasizing one over another and controlling how they relate to each other and the overall sound produced.