This article is from the Audio Professional FAQ, by with numerous contributions by Gabe M. Wiener others.
Ideally you should record a digital master such that your highest
level is at 0 dB, if only to maximize the dynamic range of your
recordings. Many people like their CDs to be loud, and thus they
will normalize anyway even if they don't hit 0 dB during recording.
Some classical recordings are deliberately recorded with peaks
that are significantly lower than 0 dB. This is done in order to
prevent quiet instruments such as lutes and harpsichords from
being played too loud. If you record a quiet instrument such as
a harpsichord out to 0 dB, the listener would have to put the
volume control all the way at the bottom in order to get a
realistic level, and the inclination would be to play it at a
"normal" listening level. By dropping the mastering level, the
listener is more likely to set the playback level appropriately.
 
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