This limiter is not placed in the audio path where you would usually find it, but in the control path of the compressor. When it is activated, it limits the control voltage according to the setting of the GR Limit controller. This means: No matter how high the input level might become – the amount of gain reduction will never exceed the value which you have set.
For comparison, imagine a fader on a mixing console with your hand moving the fader to ‘play compressor’. If now the fader was limited by a piece of duct tape at -10 dB, for example, it could only reduce the signal up to this value. If the input level dropped below this limit, the fader would be moved up correspondingly.
However, if the input signal got even louder, the fader could not be moved down any further because of the duct tape limit, and then the output signal would become louder again in correspondence with the input signal.
Loud parts in an arrangement can keep their dynamics, as they will not be compressed beyond the limit of the Gain Reduction Limiter. Some very nice special effects like ducking or upward compression can be achieved with this easily by only reducing the quieter parts without changing the original dynamics at the same time.