A dynamic range compressor limits the volume levels of a sound recording so that it stays within a certain loudness range.
An example of where it is used is in TV broadcasting, where it ensures that the volume levels of ads are perceived as being louder than the television program itself (without any change in the actual broadcast volume).
It also has a use for recording audio from one medium to another, where the two mediums are not capable of handling the same range of volume levels (e.g. A CD can handle a much greater range than a cassette tape).