A pad (attenuator) switch reduces the signal level before it reaches the microphone's internal preamp or the interface's input stage. Common values are −10 dB and −20 dB. When to use: recording very loud sources — drum kits, guitar amplifiers, brass instruments — where the sound pressure level exceeds the microphone's maximum handling capacity.
Without a pad, a loud source can overload the microphone's electronics even before the signal reaches your interface, causing distortion that cannot be fixed. The pad reduces the signal at the source, so the rest of the chain operates within its clean range. Many condenser microphones include a built-in pad switch; some interfaces also include an input pad.
Do not use the pad for quiet sources — you will need to apply more gain later, which raises the noise floor. The pad is a tool for very specific high-SPL scenarios, not a general-purpose level control.