For best results, use Disabled. I got a 750 a while back and it always sounded like it was in the dumps. Turns out my compression type was set to full compression. Not sure what the purpose is for it but it's horrible in my books.
These are Motorola's X-Pand audio companding features. Motorola claims it improves the SNR and audio sounds "clearer", particularly when in narrowband mode. It all depends on how "clearer" is defined.
When full compression is enabled, full expansion is also enabled. It's an all or nothing type deal, sort of like using Dolby Noise Reduction on audio tape recordings. Analog cell phones had companded audio. The feature does work as advertised but all radios talking to each other need to be using it too in order for radios to sound right. When listening to compressed audio on a radio that doesn't compand the audio, the received audio from the companded radio sounds loud and punchy. The problem is the other way around where audio from a non-companded radio is heard on a companded radio. The expander expands audio that wasn't compressed originally and totally blows it apart and sounds like (expletive). I don't mind the full compression but wish Motorola would give the option to reduce the expansion ratio.
With compression disabled, I recall the choices for receive are Disabled or Low Level Expansion (LLE), with LLE being the default. I found this to be OK but makes the radio sound slightly "fuzzy" and slightly processed. The help file in the 750/1250 recommends this setting for best compatibility with radios that don't have X-Pand. Compression during transmit is disabled and only a small amount of expansion is used on receive. Disabling LLE also works fine too.
Motorola's cheap business radios and the Talkabout FRS bubble packs have X-Pand enabled all the time and there's no option to disable it. The business radios with wide/narrow bandwidth setting on some channels force X-Pand on when in narrow mode. The Motorola Talkabout FRS bubble packs could be greatly improved if there was an option to disable X-Pand on the whole radio or per channel. Motorola's higher end radios have the option to enable/disable X-Pand like in the 750 and 1250 but the cheap radios force X-Pand to be enabled all the time.
I've played around with these features but eventually end up disabling them.