What does a compressor actually do?

A compressor is a little like a combination of limiter and booster. By that we mean that extreme spikes and dips in your playing get evened out. The overall sound is often given a boost (it depends how you set it of course) for a sound that can appear to have more 'life'. Compressors use simple points in your signal called thresholds to dictate when the compressor signal kicks in.

Do I need a compressor pedal?

Compressor pedals are one of those utility devices that work better the less you notice them. Compression is about getting the optimum feel, particularly with cleaner sounds that often need a little help with uniformity and so on. If you play lots of arpeggios or strummed parts with cleaner tones then have a try of a compressor and see what it can do for your sound! Distorted tones tend to compress the signal as a bi-product of the distortion process so compression isn't as obviously useful in these contexts but there are still situations when judicious use of a compressor can add a lift and edge to a crunchy tone, turning something good into something great.

Can I use this CS-3 compressor with my bass?

Definitely! Compression on bass is a great idea to give your sound some solid and consistent substance. The CS-3 will work fine with a bass since the actual task of compression is about volume levels rather than pitch. With bass, a little compression is very welcome indeed.