I read about some compressors that they are good for signal smoothing.
it seems to work best as a gentle compressor for general signal smoothing
What does smoothing mean in this context?
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Signal smoothing is exactly was Carl Witthoft said in the comments. It just means that the compressor will increase the volume of lower volume frequencies and reduce the volume of the louder frequencies to have a smooth averaged output volume, which in-turn reduces dramatic spikes of volume that can occur in the signal and will 'smooth' out the signal. Which will give you smoother sounds. See the diagram below for more understanding.
What does this mean practically?
When you strum all the strings of your guitar at once, no note, theoretically, should be louder or quieter than another, all the notes should have the same volume.
Hope this helps:)