A compressor can be used in a DJ situation when you feel you are not able to play the music loud enough. The cause for that may be that your equipment cannot sustain more volume, or that you cannot due to external restraints increase the volume. One way DJs can try to solve such as situtation is by using a compressor.
What a compressor does is to enable you to increase the general volume of your songs without increasing the maximum volume. You can therefore push your music higher. What the compressor does is distort, increasing the quieter passages while lowereing the louder ones in comparison. Within the tango DJ-ing community there are a number of controversies regarding the use of compressors. Some tend to use it on a regular basis, as part of their style, to bring more dense music to the dancefloor. Others abhor it, complaining that the distortions involved destroy the internal harmony and character of traditional tango music. As a performer I try to do without it, but still like to know how to use it when facing a situation where other options are not available.
Here are a couple of examples of how compression can be adjusted to suit particular needs. These examples are based on the suggestions of Canadian tango DJ Igor «El Espejero» on how to adjust compression to use in a milonga. More on that on his website, here.
Above the first sound example is a part of La yumba uncompressed, the same as the left graph above. The second is La yumba with compression, as in the right hand graph. It is evident how the sound changes. It is louder, more volumous as the difference between high and low sounds lessens. The inner dynamics of the songs change in compression. It is a change that can be acceptable in certain scenarios, when it is difficult to intensify the music when needed.
It is however important to note, that when using compression it is important to do a thorough soundcheck on location before playing a live milonga to evaluate the effects.