This information came from a very informative post Scott (hippies) made in late April, 2003. I edited a touch to clean things up a little. Hope it helps!
When a DAT deck recieves a digital signal (in this case through the 7-pin), all the analog settings / switches / buttons are effectively disabled. Settings like AVLS / Limit / Auto / Manual/ -20dB / 44.1k / 48k are deactivated. Changing them will have no effect in digital recording mode. In this case, all the deck is doing is writing 1s and 0s as they stream in through the 7-pin.
There are 3 levels of analog gain structure available on the M1.
 mic-in with 20db pad
The strength of the incoming signal determines which setting is appropriate. In all three cases, levels may be fully adjusted using the 0-10 variable attenuator dial.
Utilizes the M1 onboard pre-amp to boost the incoming signal to line level, which is the ultimate goal before the signal hits the ADC.
Scott adds: Personally, what with brickwalling issues and the quality of the onboard preamp, I would avoid the onboard mic preamp altogether if at all possible.
 mic-in with 20dB pad
Same as , but the deck pads/reduces/attenuates the incoming signal by 20dB. So, if the incoming signal puts your levels at -5dB, running the 20dB pad would drop the levels to -25dB. This can be useful if your incoming signal results in levels far above 0dB. (But really, if this is the case, you should be able to run line-in.)
Utilizes a different input circuit path which expects a signal already at line level. This could be a soundboard feed, a straight mic signal strong enough to drive the line circuit, or a mic signal amplified by an external gain stage (e.g. preamp, line transformers). The 20dB pad is not available running line-in.
The limiter in the M1 performs a 'hard limit', meaning the waveform peaks will be very abruptly cut off. If you listen to a recording that employes this hard limit compression, you can hear it; if you look at the waveform in an editor on your computer, you can see it.
There is no comparison between the limiter on an M1 and an Apogee running soft limit. Soft limit does exactly what it's name implies, it engages at around -4db and gently 'rounds' the peaks as the signal approaches 0. Purists will tell you that even this 'good' compression scheme should be used with care. The raves you hear about this feature are when it is used for acoustic performances, where only crowd goes above 0 and becomes limited/ compressed. No one wants to have compressed music.
Scott notes: Personnaly, i would be very wary of using the Auto Mode/ Limiter on the deck unless absolutely necessary. What you are essentially doing is utilizing a compression scheme within the deck, and not a very good one at that.
This mode automatically adjusts the levels to try to achieve 'flat' levels regardless of the strength of the incoming variable signal. Let's say the levels are set manually. If the incoming signal starts off at -1dB and slowly drops to -20 dB, this is exactly what is seen in the waveform, an overall reduction in waveform peaks from -1dB to -20dB. With auto mode turned on, the deck would try maintain 'flat' (let's say -1dB levels) even as the strength of the incoming signal drops to -20dB. The deck basically does this is by [a] automatically adjusting levels as the strength of the incoming signal varies, setting those automatic levels at artificially high (which would normally result in clipping), and [c] using the limiter to compress any signal that would normally go over 0dB. The end result: lots of compression, no headroom, lost dynamic range.
Scott also shares: Most recordists will tell you - if recording analog-in with a DAT, NEVER use AVLS / Limiters / Auto settings, etc. so as to avoid unwanted compression.