(Cooper Carter) "The Instrument Level is to make it so the A/D converter hears the best signal it possibly can. So say you have a super low output Strat. You crank up the input level so that that Strat is hitting the converter at a level that is making sure it's well above the (very low) noise floor of the Axe-Fx. The A/D does its work and then brings down the signal it outputs to the processor by the same amount you gained up, so that what is coming in is going out, regardless. Conversely, if you have a super hot guitar, like an EBMM JP15, it's already hitting the A/D way above the noise floor, and you don't want to add unnecessary noise by having the input higher than it needs to be to convert the signal at an optimal level. So you turn the input level down a good bit. The converter then compensates for how much you turned down by bringing up the signal by an equal amount before it outputs to the processor. The signal hitting your grid (i.e. pedals, amps, whatever) is in theory unchanged in level from what is coming out of your guitar. You've just optimized the level at which it's being A/D converted. You "can't" really "clip" the input given that it takes drive pedals and what-have-you just as well as an amp does."
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