Yamaha is kind of confusing but what you are referring to is dynamic compression aka 'late night' mode. Dynamic compression reduces the peaks so things like explosions are not so loud. Dynamic compression actually raises the average level by compressing the peaks thus 'squishing' the waveform and that is why the feature often goes by the name late night mode - as in making the loud sounds less loud so as not to disturb others. Because the average level is actually increased, dynamic compression makes it easier to hear the dialog although the loud parts are reduced.
Unlike Onkyo which uses the more straightforward nomenclature of Off, Low. and High, Yamaha makes it confusing using the terms Standard, Min, and Max. If I am not mistaken the terms actually refer to dynamic range (the difference between the softest and loudest parts) so Max actually means maximum dynamic range (ie no compression or Off), Min means minimal dynamic range (ie High compression) and Standard means 'standard amount of compression', which equates to Low (minimal compression).
There is no right answer as to which you should choose. Max means no compression (Off on Onkyo receivers) but you can experiment with Min and Standard to see which you prefer. For what it's worth I often use High on the Onkyo, which I think would translate to Min on the Yamaha (min Dynamic Range == maximum compression). Standard would equate to Low as in a little bit of compression.
