The compressor is one of the least glamorous effects and one of the least understood. However, it can be very POWERFUL when used properly. The compressor makes the dynamics more even. The low volume sounds become louder and the high volume sounds become lower. Compressors are used extensively in studio recordings, radio production and for live performances.
Compressors work by using an audio level sensing function to keep track of the sound level. When the sound level gets too high for the right amount of time, it is reduced. Once it is reduced, the entire signal can be amplified, allowing you to hear the low volumes better.

The image above shows an original sound. Notice the big difference between the peaks and valleys of the sound.

The image above shows the sound with the Compressor effect on. Notice that it is a stronger & ‘fatter’ sound and the peaks and valleys are closer together.
Threshold
The audio level where sound is compressed. This effect is in dB . The range is from 0 dB to –30 dB. –30 dB represents the strongest threshold with the most amount of compression.
Attack time
This sound level needs to be above the threshold level for this amount of time in order to be compressed. The valid settings are from 0.01 milliseconds (ms) to 150 milliseconds.
Release time
The release time is the length in time to restore the audio signal from being compressed back into its normal state. The valid settings for the release time are from 10 milliseconds to 500 milliseconds.
Ratio
This parameter indicates how much to compress once it is passed the threshold. The valid range is from 1 to 35. A value of 1 is no compression and 35 is the maximum amount of signal compression.
Output Gain
This parameter adjusts the output gain of the compressor. Note that this amplification will be in addition to automatic volume adjustments via the "Auto Gain Compensator".
Auto Gain Compensation
This will automatically adjust the gain on the compressed sound in addition to the "Output Gain" setting above. Auto Gain Compensation boosts the audio signal to full strength. (Depending on the audio, you may need to additionally raise or lower the output gain.)
Tips
q Vocalists/Singers: Apply compression to even out the volume changes if the singer is moving to and from the microphone.
q Presence booster: Instead of applying EQ, you might try adding a compressor to vary tone quality of a recorded instrument.
q Guitar / plucked sustain increase: Normally, after a guitar string is plucked, the sound dies away. Light compression with a long release will increase the sustain.