Also known as MB or MBC.
These divide the incoming audio signal into multiple bands, with each band being compressed independently from the other.
The beauty of this is that with full band compressors the whole signal is treated, so when a peak is detected, the whole signal is compressed and so other frequencies are also subjected to compression.
Multiband compression only compresses the frequency bands chosen, so a more fluid and less abrupt result is gained. Instead of having one peak trigger the compressor into compressing the entire signal, the multiband allows for individual bands to be compressed. On some compressors, you even have the option of selecting bands that will not undergo any treatment. In essence, a multi-band compressor comprises of a set of filters that splits the audio signal into two or more frequency bands. After passing through the filters, each frequency band is fed into its own compressor, after which the signals are recombined at the output.
The main advantage of multi-band compression is that a loud event in one frequency band won't trigger gain reduction in the other bands.
Another feature of the multiband compressor is that you are offered crossover points. This is crucial, as you are given control over where to place the frequency band. Setting these crossover points is the heart of the compressor and crucial in processing the right frequency spectrum with the right settings. For example: if you are treating the vocals in the mid range but put your low end crossover too far into the middle range, then the low end compression settings will also affect the mid range vocals.
Multiband compression can either be a friend or enemy. It all comes down to how you use it and when. It can be a great compressor for controlling problematic frequencies, or for boosting certain ranges in isolation to others. I tend to use them to rescue poor stereo mixes and with the aid of new features like corssover frequencies and threshold and ratios for each band I can have more accurate processing.
However, use with care.