The problem isn't just peak limit, but the fact that most CDs today are highly compressed. Peak limit just makes sure that the loudest parts of your music don't cross the 0dB boundary, which results in digital thwacking (as opposed to the oversaturation sound you used to get with records and tapes). Compression means the net result is you get high relative volume, but no dynamic range. That's why commercial CDs sound louder. So that's the trade-off. You can compress your music so it seems to be as loud as commercial CDs, or you can keep your dynamic range so soft is soft and loud is loud. I generally prefer the latter and just hit the volume knob on my stereo if I want it louder.
By the way, that's also why TV commercials also seemed so much louder than the TV shows - the audio is compressed, which comes across as louder. The TV show was not, which comes across as softer.
Maybe I am wrong but I understood that compression simply reduced the amplitude above a certain threshold, but using something like a loudness maxamizer or auto gain along with the compression can then bring up the perceived loudness level, getting rid of the peaks or bringing up the average level of the audio instead.
I thought that compression on its own doesn't make any thing seem louder, in fact could even make it seem quieter.
Got these ideas from the introduction to music production on coursera, but there again maybe I took it up all wrong.
Musiclover