The main difference between velocity and volume with respect to the Makeup Tools is that velocity changes the SOUND of a Tone or drum sound that has either multiple samples for one sound (say a snare or kick sound that goes from a soft hit to a brighter, harder hit, or a piano with samples for soft and loud playing) or voice programming that opens up a filter as you play harder (so the sound gets brighter, or faster attack etc.).
Volume simply makes the existing sound louder or quieter, velocity makes the sound DIFFERENT.
In practical terms, this can make a huge difference to the way a MIDI sequence or style sounds. If you listen to many of the drum kits (especially the newer ones) you'll hear hi-hats opening up a bit when hit harder, or a snare go from head to rim sound, etc. Some of the acoustic guitars you'll hear go from a softer sound to a hard pick.
So if you're editing a style, change to a different kit, and feel like you'd like the sound of the drummer playing softer, don't turn down the volume... It will sound exactly the same only quieter. Turn down the velocity and this will bring the whole kit (or just one sound within the kit!) down into the softer samples, or make a guitarist sound like he's playing softer etc..
I do a fair bit of editing work on older SMF's that were created on older keyboards that didn't have multi-velocity sounds. so in practice on those older keyboards, it didn't matter much if a drum part was being played with high velocity and the volume turned down. or low velocity with the volume turned high. But modern keyboards it makes a huge difference.
If a snare sound is hitting the rim hard all the time (and it has any dynamics at all! Some early drum programming simply didn't use any dynamics because either the programmer was lazy or the sound source had very little timbral change!) try turning down the velocity until the rim sound only comes in on backbeats or the hardest hits. This is a lot more like what a drummer would play.
Same with hihats, tomtoms, basically anything with multiple samples. It can make a robotic drum Part come far more alive.
There are a couple of caveats. Firstly, you can't add more velocity once the Part hits 127. Well, you can, but you're not making the 127 hits any louder/stonger, just bringing up the low hits until they're ALL 127 and you've no dynamics at all! This also applies to volume. And you can't turn the internal volume of a single drum sound up (only the whole kit), so if the sound only sounds good at a lower velocity but you want it louder you have to try something different... (edit: you CAN turn any sound down though!)
Try the per sound EQ! Every drum sound inside a kit can have its own EQ. So find the main frequency of the quiet drum, set the EQ so it has a very broad Q (bandwidth) and raise the gain on that. Simple and effective!
Knowing the difference between volume, velocity and expression can help you get far more realistic styles and sequences. Hope this helps.
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An arranger is just a tool. What matters is what you build with it..!