A Noise Gate does exactly what it sounds like.
It acts as a gate and opens when a threshold is achieved and then closes depending on how fast a release you set, basically acting as an on-off switch.
It reduces gain when the input level falls below the set threshold, that is, when an instrument or audio stops playing, or reaches a gap where the level drops, the noise gate kicks in and reduces the volume of the file.
Generally speaking, noise gates will have the following controls:
Threshold: the gate will 'open' once the threshold has been reached. The threshold will have varying ranges (eg: -60dB to infinity) and is represented in dB (decibels). Once the threshold has been set, the gate will open the instant the threshold is reached.
Attack: this determines the speed of the gate kicking in, much like a compressor's attack, and is usually measured in ms (milliseconds) and sub derivatives of. This is a useful feature as the speed of the gate's attack can completely change the tonal colour of a sound once gated.
Hold: this function allows the gate to stay open (or hold) for the specified duration, and is measured in ms and seconds. Very useful particularly when passages of audio need to be 'let through'.
Decay or release: this function determines how quickly the gate closes and whether it is instant or gradual over time. Crucial feature as not all sounds have an abrupt end (think pads etc).
Side Chaining (Key Input): Some gates (infact most) will also have a side-chain function which allows an external audio signal to control the gate's settings.
When the side-chained exceeds the threshold, a control signal is generated to open the gate at a rate set by the attack control. When the signal falls below the threshold, the gate closes according to the setting of the hold and release controls. Clever uses for key input (side-chaining) are ducking and repeat gated effects used in Dance genres. The repeated gate effect (or stuttering) is attained by key inputting a hi hat pattern to trigger the gate to open and close. By using a pad sound and the hi hat key input pattern you are able to achieve the famous stuttering effect used so much in Dance music.
Ducking: Some gates will include a 'Ducking' mode whereby one signal will drop in level when another one starts or is playing.The input signal, which is usually the signal that needs ducking, is sent to the key input (side-chain), and the gate's attack and release times set the rate at which the levels change in response to the key input signal. Popular use for ducking is in usually the broadcasting industry whereby the DJ needs the music to go quiet so he/she can be heard when speaking (once the voice is used at key input and triggered then the music will drop in volume).
However, side-chaining (key input) and ducking are not all the gate is good for.
The most common use for a gate, certainly in the old days of analogue consoles and tape machines, was to use the gate to remove 'noise'. By selecting a threshold just above the noise level the gate would open to allow audio through above the threshold and then to close when required. This meant that certain frequencies and levels of noise were 'gated' out of the audio passage and thus cleaner.
BUT it doesn't end there. There are so many uses for a noise gate, using an EQ unit as the key input for shaping audio lines and curing false triggers, for ducking in commentary situations (and still used today), for creative sonic mangling tasks (much like the repeat gate) and so on.
With today's software based gates we are afforded a ton of new and interesting features that make the gate more than a simple 'noise' gate.
Experiment and enjoy chaining effects and dynamics in series and make sure to throw a gate in there somewhere for some manic textrues.