Plugin Delay Compensation (How does it work?)

The plugin delay compensation that X2 automatically adds has bit me in the ass. Its "invisible latency meant i could no longer record in time sync, too much delay between playing the KB and hearing the KB. You guys sorted that out for me but I have another question. How smart is PDC? If subgroup one has a plugin that creates more latency than the plugin in subgroup two, I'll guess subgroup two is delayed back to meet up with subgroup ones timing so that the master bus sees them at the same time. What about an input that goes directly to the master? Is every pathway delayed back to the latest arriving one? PT

PDC is one of the unsung strengths of SONAR, which was one of the first DAWs to implement it. It's quite complex under the hood, and it took years to get it right, especially with regard to external inserts. AFAIK they'd nailed by version 8.5.3 and I've seen no issues since then. 

The main weakness that remains is beyond SONAR's control, and that is that the scheme depends on the plugins themselves to accurately report their own internal latencies back to SONAR. Sometimes they don't, or as Mike noted, sometimes the latencies change abruptly and can throw the synchronization off. But yes, the mechanism is "smart" and readily adapts to whatever signal chain you throw at it.

Where users most often get caught by surprise is when they insert a high-latency plugin before they're done tracking and suddenly there's too much lag between hitting a key or plucking a string and hearing a sound. 

Some plugins have inescapably-high latency due to the way they work internally, because they work on large chunks of data rather than sample-by-sample. This is why Ozone adds so much latency once you've inserted it. Other plugins introduce latency just because of the amount of processing they do, such as convolution-based processors. Consequently, it's best to hold off inserting things like PerfectSpace or the LP-64 linear-phase mastering equalizer until you've finished all tracking.

To answer the original question: yes, every pathway is delayed to match the longest signal path. Be glad you don't have to calculate it all manually and use a delay plugin, like Pro Tools LE users had to do for so long!