If you have loud peaks, normalize will only raise the entire file enough to for those peaks to hit -1 dB or whatever you set it for. The ratio between loud and soft will stay the same. The peak(s) can still cause the file or track to sound too soft if they are too large. It can, of course, work on the right track. Othertimes, it it necessary to lower the ratio between the loudest and "normal' sound level of a track by using automation to ride the levels or a comp to get the track to fit right into the soundscape.
Normalize is just a another tool, tho will often trip up a newbie who thinks it will make the track sound as loud as possible. It can, but not necessarily.
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