A “peak limiter” is a kind of dynamic range compression effect that “pushes down” on peaks so as to reduce their level. Unlike other compressor effects, limiters have little or no effect on the surrounding audio (except for a few milliseconds either side of the peak). They are particularly useful for reducing “transients” (very short loud sounds) that would otherwise prevent the audio from being amplified without distortion, and can be used creatively for beefing-up drum sounds.
Audacity (2.0.5) currently ships with a “Hard Limiter” LADSPA effect (Update: The LADSPA Hard Limiter is no longer shipped with Audacity) but despite its name and the description in the manual, this is not a “true” limiter in the conventional sense. Rather, the Hard Limiter effect “chops off” the tops of the peaks, then adds back a lower level copy of the peaks. This is less destructive than simply “clipping” the tops of the peaks, but nevertheless it still introduces distortion that can sound quite bad if it affects more than a few occasional peaks.
The peak limiter of this post is a true “fast compression” effect that limits peaks to the specified level without introducing unwanted distortion.