Right chaosscott!
THis is a problem budding engineers run into all the time: You're looking at your wave form and thinking you have a nice hot level because the waveform is filling up the entire image. What you have to realize is that it is not; only the peaks are.
Take a voice, for example. This is one of the most difficult instruments to record in terms of dynamics. Suppose the singer sings the line "Two tickets to paradise", and the loudest parts of the wave form (all the "T" sounds) are at exactly 0 db. You think you have a nice hot level, but you don't because everything else is clear down around -12 db.
A peak limiter will put a lid on those quick transients that tower above the rest of the wave form, and bring them down closer to the level of the everything else, thus allowing you to raise the ENTIRE vocal level without clipping. Get it?
The same goes for a full mix. A peak limiter will pull those transients down (snare attack, hi hat, whatever) closer to the meat of the mix, allowing you to turn the ENTIRE mix up without clipping.
It takes a lot of listening to learn how to use compression well, but with DAWs it's easier than ever.
Good luck,
Aaron
http://www.aaroncheney.com