Previously, you never really knew if you were singing too loud and clipping your microphone. You'd just start noticing overdriven or distorted sound recorded into your loops and performances. Now, we have improved the signal path meaning you will clip less, and will be warned as you begin to sing too loud. he input waveform will show yellow when it's close to clipping, and red when it has clipped.
To achieve the best signal to noise ratio possible, ideally you'd want the waveform to be turning yellow occasionally and red never. Sometimes however, a little distortion can be fun to play with, as long as you are expecting the results.