Compressors and limiters were originally developed as tools to prevent overmodulation in radio broadcasts. They were then introduced to recording studios for music production. In the early 1960s, manipulating dynamics with a compressor/limiter was not considered a crucial part of a good mix. Without a rack full of compressors at hand, engineers were forced to solve dynamics problems in other ways, either at the microphone or at the performance/arrangement. Most studios back then had only one or two compressors, and in many cases, they were only used in the final stages of production.
With today's digital recording environment and signal processing capabilities, we are no longer tied to expensive and bulky hardware compressors and can use almost as many compressors as we want in a session. Today's compressor/limiter is no longer just used to manipulate dynamics, but often to shape the character of a sound.
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If you use a compressor exclusively to solve a problem, it is good practice to delay applying compression until you find a track for which you cannot find a suitable (static) fader level. This is where you might need to compress. For example, consider a lead vocal where some of the notes lack a bit of level. If you find a balance that works for most of the track, the softer, more delicate notes tend to get drowned out by other instruments. If you find a balance that lets the words be heard more clearly, the louder notes will be way too loud.
In short, understanding when and how to use a compressor is absolutely crucial for a modern mixing engineer. Compressors are versatile tools that can help control dynamic range, change the tonal character of a sound, and can be used as a special effect. To achieve the desired result, it is important to first consider the overall balance of your mix before applying compression.