If Amanda does compression of the backup images, it can do so either on the backup client host before it goes to the holding disk or on the tape server host as it goes from the holding disk to tape. Which place to do compression (if at all) depends on how well the dump image usually compresses, the speed and load on the client or server, network capacity, holding disk capacity, tape hardware compression, etc.
For either type of compression, Amanda also allows you to select one of two styles of compression. Best is the best compression available, often at the expense of CPU overhead. Fast is often not as good a compression as best, but usually less CPU overhead.