Movies can have a very wide range of volume of sound. It can go from a whisper to big explosions and crashes. Imagine all this on a certain scale from 0-100, where 1 is the softest sound and 100 the loudest sound. On a system that doesn't use some form of DRC, when you set the volume so you can hear the softest sounds, the loudest sound can be really really loud. Great if you want the full impact of the audio portion of the presentation. But not so great if you're trying to be considerate to other dwellers in or adjacent to your residence. But if you dial it back so that the loud stuff isn't too loud for your situation, you'll no longer be able to hear the soft stuff. So that's where DRC comes in: It compresses that range so that the loud stuff isn't that loud. And that way you can leave the volume up so you can still hear the soft stuff, but now the loud stuff plays at a much lower level so that you don't wake up your neighbors. Obviously for the "best" experience, you should leave DRC set to "off", but for practical reasons (like late night viewing) you may want to turn it on.
"He who asks feels dumb for a few minutes, but he who does not ask remains dumb forever."