Side chain allows you to use an effect on 1 track while having another track control the effect.
For instance a compressor:
Normally, a compressor would take a signal at its input, and if that signal exceeds a certain limit (the threshold) it will apply gain reduction. When using a sidechain, you can apply the gain reduction to a track not because of the signal levels of that track, but of another track. So if you have a pad sound going into the compressor and a drumtrack going into the sidechain, you get gain reduction on the pad sound whenever a drumsound plays.
In short you open up the detection part of an effect to another signal than the one you're processing.
Software: Steinberg Cubase Artist 6.5.5 64-bit.
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Mackie Onyx 1620i - Steinberg Midex 8 - Steinberg CC121.
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3rd party plugins: Native Instruments Prism - Rob Papen Distort - Rob Papen DelayMy humble contributions to what could be considered music.