Maybe I'l jump on this.. a limiter limits the level that a signal can reach to some set threshold, often 0db to prevent clipping. Another way to look at it is that its a compressor with an infinite ratio once the threshold is met. So there's no gradual gain reduction, its kinda immediate instead, but uses some rounding algorithm to make it sound nice rather than chopping it off squarely.
In digital post, software can "look ahead" to the next coupla samples of your file, determine the signal is going to go over based on the gain being applied, and limit the signal to the chosen threshold. Interestingly this can't function in an ultimate sense within the analog domain due to the real time factor - in order to tell that a signal is going to go over say 0db, the signal has to go over 0db first, and that hasn't happened yet! I think most analog limiters allow a brief transient through before clamping down on the signal.
Sony has the new PCM-D1 recorder out that digitally buffers the incoming signal at -20db gain, then analyses that level and applies limiting before writing the track at the full gain level. This way it achieves real clip protection providing you don't have spikes over 20db. The use of wildly excessive limiting of course allows the full-tilt in-yer-face, grossly dynamic-free productions that are so popular nowadays..
but its been on my mind a little lately because the stuff I'm taping often has audiences louder than the music, which has me setting levels to the audience reaction instead of optimizing gain levels for the music.. anyway, hope that helps!