FAT mode pushes the saturation, generating more harmonics. With FAT mode engaged, you will perceive both headroom reduction and a more compressed sound. Fat mode emphasizes low-end saturation and makes for a more aggressive sound.
You may find FAT mode useful on certain tracks: to “fatten up” a bass guitar or a digital synth, for example. We recommend using FAT mode judiciously. Consider the “trade-off” cost of the necessary loss in headroom before applying.