^ Oops, heroine mix up!

Scooter nails it in a practical sense in that one can choose to optimize the recorded level of the music itself and allow the louder applause be limited or clipped, or optimize the recorded level to accommodate the applause at the risk of a higher level of audible noise during the quietest portions.
One needs to figure out which way works best given the recording situation, the capabilities of gear being used, and the priorities and work-flow of the taper.
Its a common choice around TS to do the former, with a focus on noise-free music even if the applause sounds distorted or less than natural. I've chosen to set things up so that I can accommodate applause without limiting or overload and still get the recording system's noise-floor lower than the acoustic noise-floor in the hall, which I can do using 4060 (barely). It often feels like threading the needle in terms of setting recording levels, and requires extra work afterwards because although the raw recording features neither overload, limiting, nor noise, it features a dynamic range too large for causal listening. The natural sounding applause is way too loud relative to the quiet and often even the loudest portions of the music - just like it does in real life compared to a finished recording with optimal playback dynamics*. This shifts the necessary manipulation of dynamics to post-recording work where one can achieve a more natural sounding result in order to avoid the listener having to leap to the volume knob whenever applause comes in. But it takes a recording system which can fully accommodate such a wide range, setting it up optimally, and post-work to transparently reduce the dynamics. That's a lot of work that many folks don't want to have to do.
No wrong answer on which way to go there, its one of personal choice.
*It frequently amazes me that in actual performance situations, people don't realize how loud their applause actually is in comparison to the music they have just been listening too and focusing on. I think this reflects not only natural enthusiasm, but also a fundamental feature of human hearing. We sort of mentally limit the apparent level perception of our own applause, and have been socially conditioned to do the same for the folks around us. Now almost painfully consciously aware of this, I frequently feel like I'd like earplugs in just for the applause portions of classical concerts. Similarly we all have stories of the ridiculously loud clapper that always seems to have the seat adjacent to ours. Accurate documentation of that dynamic range is not the goal!