This should probably be merged with Audio level compression or Companding

In telecommunication, the term signal compression has the following meanings:

In analog (usually audio) systems, reduction of the dynamic range of a signal by controlling it as a function of the inverse relationship of its instantaneous value relative to a specified reference level.

Signal compression is usually expressed in dB.

Instantaneous values of the input signal that are low, relative to the reference level, are increased, and those that are high are decreased.

Signal compression is usually accomplished by separate devices called "compressors." It is used for many purposes, such as (a) improving signal-to-noise ratios prior to digitizing an analog signal for transmission over a digital carrier system, (b) preventing overload of succeeding elements of a system, or (c) matching the dynamic ranges of two devices.

Signal compression (in dB) may be a linear or nonlinear function of the signal level across the frequency band of interest and may be essentially instantaneous or have fixed or variable delay times.

Signal compression always introduces distortion, which is usually not objectionable, if the compression is limited to a few dB.

The original dynamic range of a compressed signal may be restored by a circuit called an "expander."

Source: from Federal Standard 1037C in support of MIL-STD-188