The explanations of compression on here are a bit oversimplified.
In compression, a threshhold point is set at some level, such as -10 dBFS. Whenever the wave is quieter than -10, nothing happens. Whenever the wave hits or exceeds that point, every increase
above that point is reduced proportionally by some specified amount. For example, you could do 2:1 compression at -10, which means that a -11 dB signal would stay at -11, but a -2 dB signal (8 dB over the threshhold) would be reduced to -6. (4 dB over the threshhold). The result would be that the loudest possible sound (0 dBFS) would be reduced to -5 dBFS, meaning the whole signal could then be raised by 5 dBFS without ever clipping. This is called "makeup gain."
"Limiting" is basically compression that's set to a very high ratio, like 5:1 or more. Then there's limiting done at such a high ratio that it practically puts a volume ceiling right at the threshhold point, and this is sometimes called "brickwall limiting."
Compression is not bad. You'll find compression on just about every pop song ever recorded ("pop" meaning anything that's not classical) and no studio is complete without one, or many compressors. The bad thing is when compression gets too aggressive (high ratios, low thresshholds, lots of makeup gain) and the dynamics of the recording become so crunched that they start to sound awkward and unnatural. Another bad thing which some sh*tty engineers do is set their levels so high that the waveform on the CD hits or blows past its maximum level (0 dBFS) which causes clipping. Digital is not like analog, where you can oversaturate the tape and get a musical-sounding distortion out of it. When you "oversaturate" a digital waveform, the tips of all the waves get "shaved" off and it doesn't sound musical in the slightest.
Overaggressive compression does not cause clipping, nor the other way around. Both are symptoms of the effort to release the loudest, hottest-mixed record. Sometimes this is an artistic decision, and sometimes this is done by the mastering engineer.
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Originally Posted by markl
There's a third factor here as well-- Pro Tools. Often you have the music slammed and compressed long before it reaches the mastering engineer. It is highly likely that many of the master versions of most modern albums can never ever be "fixed" or restored to full-range, because they were never recorded or mixed that way to begin with. There is simply no dynamic range to restore... 
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You're right about the fact that sometimes a signal is crunched before it even gets to the mastering process, but this has always happened and it has absolutely nothing to do with the supposed evils of modern studio techniques. Pro Tools can record at 24-bit and does not introduce any compression you don't deliberately throw at it, and
adding compression in Pro Tools is not necessarily any easier than sending an analog signal through your console's compression circuit.