All that Normalise does is increase the level of a complete clip, using the highest peak within that clip. You will generally lift the level such that the peak does not go over 0db.
Yes, is does increase the noise level.
Equalisation is a completely different tool, and does not replace Normalising.
Compression is similar to Normalising, except that it squashes just the peaks, thus allowing the rest of the wave to be lifted to a higher level.
This is, of course, just a simplistic way of looking at the above subjects. I just do not have the time at the moment to cover all of the bases. I am sure that someone else will be along soon that will elaborate on what I have said.
cheers
andy
edit; oh, and yes, I still, for one, use Normalise. If I just need to lift the level of a recorded wave file, without effecting anything else...
And something else... you can use EQ, in some instances, to eliminate some of the so called "noise" by filtering it out. Typically, we are talking about hiss, rumble and 50~60 hz hum...