This setting applies dynamic range compression (DRC) when used with ffdshow's built-in AC3 and E-AC3 decoders. The slider below allows to set the compression level between 0 and 100%.
Having “Regain volume” enabled (in “Volume” options under “Normalize”) resp. the DRC slider set to 100%, achieves basically the same result: it applies dynamic range compression. The difference is that AC3/E-AC3 sources have pre-calculated amplification factors built-in and should - in theory - provide smoother and more accurate “volume control”. In practice they are usually used to “flatten out” the sound though. Regain volume on the other hand, does not require pre-calculated values, and can be used with all audio formats supported by ffdshow. It does not change the volume as aggressively as Decoder DRC, and retains more of the original dynamic range. Both settings can be used simultaneously.