A. Yes, Always on. Currently, when I use my ZOOM B3 (as a preamp for a full range rig powering PA-type stage cabinets), I have the dbx 160x model, located before the amp model. I've also used the real analog dbx 160x in some traditional live rigs, placed last after effects/stomps, and before the amp's input. My last traditional rig had me using an Empirical Labs EL8 Distressor (AWESOME!), again, after all pedals/effects, and before the input of my full Ampeg SVT Classic all tube 8x10 rig.
B. Generally hard rock/metal. Currently, with my modeler rigs, it can be anything from soft pub duo acoustic music, pop, R&B, rock, hard rock, metal
C. Settings and coloration depend on the compressor being used. I find the virtual B3 compressors to be sort of picky, and tend to set them less aggressively than I might a good analog compressor. 2:1 ratio or less, a couple db of gain reduction, used to even out the tone discrepancies caused when engaging stomps and effects, and when my playing gets a little unhinged from having too much fun! In the case of the EL8 Distressor, that particular compressor is a high end unit designed to provide a type of emulation of tube compressors (though it isn't a tube comp). It has side chain filters, distortion modes (2nd & 3rd order harmonics for tape or tube type distortion), and can be set very aggressively (it has NUKE setting that is a very transparent "brick wall" limiter) without a lot of the obvious negative side-effects that plague a lot of compressors on the lower side of the pricing scale. It is a great "vintage" emulator when used with, for example, a nice Neve mic pre and recorded direct. EL8 = great, great comp. Pricey.
Note to mods: given the number of thread starts in the EFFECTS and LIVE SOUND forums, it may be worth polling the forum to see if you should create a specific sub-category forum just for Compression, and all things related to Dynamics processing. It is a really complex and important topic, and it would be great to have all of this info correlated in one location. Just a thought. ;-)