Sidechain compression is a popular effect in music production for reducing or compressing the signal of one track based on the level of another track. Frequently in Electronic music, the kick drum is used as source signal and then the compression effect is applied to a synth or pad on every beat of the kick.
When the Side Chain option is selected, the source of the SideChain can be chosen from Drums 1 to 4. (the 4 LEDs in the top right) and then the level of sidechain is applied to tracks 1 and 2 on the first page, with red pad on the left being no compression all the way to the right for maximum. Hitting the down arrow brings up a second page where the compression level of 3 and 4 can be applied. There is not much scope for customization outside of this simple setup compared to the options that would be in a DAW. But that is kind of the point of using a device like the Circuit Tracks, the limitations keep the flow going.
Note in order to use the compression on tracks 3 and 4 you will need of course to send the output of your external device to the input jacks 1 and 2 on the Circuit tracks.