I've heard mention of side chaining or side chain compression in reference to electronic music (specifically Daft Punk). What is it?
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With standard compression, the level of the input is used to control the compression. So, when you have loud levels on the input, the compressor works with the input signal and knocks them down, sending them to the output.
Side chain compression has two inputs. One is the signal to be processed, and the other to control the compression. You hear it a lot in electronic music where the kicks come in and everything else ducks out of the way and comes right back after the kick.
So with side chain compression, when there is a loud level on the side chain input, the levels of the regular input signal are reduced.
Brad's schema is correct.
Additionally, using the side-chain gives you an important feature: it allows you to filter the input signal separately, before it is fed to the compressor.
This way when the signal has transients outside this frequency range, the compressor doesn't hear these and doesn't react.
It's a side-chain, because it's still the complete signal that gets compressed and sent out.
This way, the sound of e.g. the snare drum doesn't trigger the gate.