This is a continuous debate and comes up often with clients here as well as on the web. I figured i would quote an in depth explanation that has been bouncing around on Gearsluts for a few years:
"To learn to mix ITB coming from an analog world you must revisit what Voltage reference Analog consoles work at, and make appropriate adjustments to translate this to work ITB.
The first thing we must ask is simply what is 0VU. What does it mean to us. Lets use an SSL G+ as our point of reference mainly because I work on those every day. If we put a signal into the line input of the SSL so the channel meter reads 0vu, that also, is referenced as +4 or 1.23 volts. A kick ass SSL will go out to about +24DB, so we have approximately 20 DB of headroom above the 0 VU point on the meter before the signal goes to crap.
Now let take a common situation. A Client hands you a Protools session and you spread it out over the SSL console. Like most people today every track is recorded as hot as hell. Most pro Eng's will use proper gain staging and get the now slammed meters reading around 0VU or 1.23 volts. By lowering the line trim we now have a good level into the desk so we can Compress/Gate/EQ the Signal without it overloading the processing. Sounds simple right? Remember that all outboard equipment was designed to work around the 0VU/+4/ 1.23 Volt reference. So by putting the incoming signal at around this reference, your rack equipment will work better as well.
Why use a +4 reference? Well remember that the 1.23 volt reference came from the tube days where 1.23 volts was enough voltage over the plate noise that you still had a good signal to noise ratio, but still left room above 1.23 volts to allow for normal audio operations.
Now to ITB. Lets pretend we have the same setup as we did on the SSL. Client hands you a session that’s recorded hot as hell. Now most folks mixing ITB don't understand reference levels when relating it to Digital. To have the same amount of "headroom" as we do on the SSL we must create a reference of 0VU or 1.23 volts at -20 from 0DBFS or the top of the Digital scale.
So if you simply place the good old trim plugin as the very first plugin, you now have the ability to adjust your tracks to our Mixing (+4/1.23 volt) reference IE -20. Just like you did on the SSL. You have have the same amount of headroom. Now with your tracks properly gain staged, you can add EQ/dynamic plugins and not run out of headroom. You can also insert hardware and they will operate much better as they are operating at the level they were designed to operate at.
Plugins use the same reference at real equipment. Never try and drive them to the top of the Digital scale. Don't try and make your mix look like a master. You don't do that on an analog console, so why do we do it ITB?
The answer is simple. DAW meters suck Butt. There should be a meter mode in all DAW's that makes the meter at 3/4 scale equal -20 at 1.23 volts. Just like the old VU. This way, novices will quit corn-holeing their levels.
Something to think about. The noise floor of an analog desk is about -75 DB from our +4 reference. Our equivalent "problem level" below our -20 reference in digital is well over 100 DB. So please don't let people tell you analog has more "headroom" than digital. This is simply not true. Headroom is only relative to your noise floor below your reference. Remember if the volume is to low, turn up the darn speaker volume.
Running a Digital mix right to the top of the scale is like running your SSL mix buss where the VU meters are slammed all the way to the right and you are constantly hitting it at +25. No one will get a good sounding running the desk like that. You won’t get a good sounding mix in digital either.
So what does all this mean? Put simply, proper gain staging is essential to both analog and digital mixing. You just need to correlate the references between the two. Once you figure this out, I'll Guarantee your mixes will start to sound open and wide, just like the good old analog days."
Full discussion here