Here's a good article outlining limiters: http://music.tutsplus.com/tutorials/a-beginners-introduction-to-limiters--audio-1071
It gets somewhat technical, but any answer beyond a superficial one inherently will. Let me try, though!
The main option you'll be looking at on any limiter is the "out ceiling," which is the absolute maximum volume level that will be allowed - that means anything that goes louder than your "out ceiling" will be "forced down" in level to meet the out ceiling. Still with me?
To give that a specific example with numbers, the "loudest thing possible" on most limiters should be 0.0 dB (weird, I know) and anything softer than that will be in the negative numbers (I don't make these systems up). Since hitting 0.0 will typically register as peaking/clipping, you could set your out ceiling to say, -0.1 or -0.2, which would allow sound to get right up to "as loud as possible," but keep it from actually going over the top. This in general is a good way to ward off distortion - sound can occasionally have random, brief spikes in volume, and having something in there to automatically take the edge off these brief moments of excessively loud sound can save you time mixing - and if you're in software without really detailed mixing tools, it can prevent distortion you otherwise can't fix.
This is the general, broad-slice look at it. Beware though, if something goes ridiculously louder than the limiter's out ceiling, you can still get distortion - so it's a good safety net, but not a guaranteed fix-all. In those cases, adjusting the level of the offending audio clip is still the way to go.