Here is one answer:

The amount of gain reduction is determined by ratio: a ratio of 4:1 means that if input level is 4 dB over the threshold, the output signal level is 1 dB over the threshold. The gain (level) has been reduced by 3 dB: Threshold = −10 dB.

Gain Reduction can change the tone of your tracks. Sometimes for the better, adding a certain vibe or pleasing character to them - some like to use a hint of it on the master bus for "glue"... and I don't see a problem with that - in small amounts, I think it an often be beneficial - but - it can also be detrimental, too.

Can you folks tell me how compressor gain reduction curves are generated like this one:

http://www.manleylabs.com/PDF/PRO_Manuals/Var%20Mu/gr%20chart.pdf