When you increase gain in software, like moving the slider in SDRSharp from left to right, you not only increase the desired signal, you also increase unwanted signals: commonly called noise.
Not enough gain, signal will be not strong enough.
Too much gain, signal will be swamped by other signals - like someone shouting into your ear.
You get the best signal - received audio or cleanest weather sat image etc - when Signal-to-Noise ratio is highest.
RTL-SDR dongles are electrical circuits, so they also generate noise when you increase gain, and this lowers your Signal-to-Noise ratio.
One way to combat this is by using a preamplifier, also called preamp or Low Noise Amplifier (LNA).
Gain and Noise Floor
An easy way to demonstrate internal noise generated inside RTL-SDR dongles is by using keenerd's rtl_power (link). This handy and free utility scans the frequency range of RTL-SDR dongles, and returns a value. Plotting these values are possible with Excel, so we can examine returned values versus gain settings.
No antenna involved, only a 75 Ohm resistor, so any visible changes will be the result of changing gain settings in software.
The plotted graph provides a line, which is called noise floor: should be as close to the bottom of the chart as possible.
Let's see what happens to the noise floor at 0dB, 30dB and 50 dB - common settings with RTL-SDR dongles.
The difference between blue (0dB) and orange (30dB) lines are not that significant on screen, but will be audible and visible during use.
Let's increase gain to 19.7 dB, the closest value available to a preamp's 19dB. SNR ratio jumps to 31, but the waterfall is also full of noise, represented by white lines and speckles:
Enter a preamp: it adds gain to the received signal, but with lower noise than the dongle on its own.
Turn down dongle gain and add a preamp.
(Signal at 121.85 is a transmission from Ground and unrelated).
SNR ratio will be slightly higher, and blue waterfall area will be cleaner.
The "low noise" in LNA
As seen above, dongles generate noise during amplification, but an LNA's noise figure will be lower than the dongle's.
The equation only works as long as the pre-amplifier will be a low-noise type.
Noise figures are specified for a particular preamp - if there's no noise figure for a product, don't buy it.
Should be as low as possible: for example, Janilab's preamp has a 2.1 dB noise figure at 2 GHz, and the LNA4ALL from Adam has a 0.98 dB NF at the same frequency. Noise figures are just one element of the jigsaw, as other specifications also play a role, but a noise figure is easy to understand.
Amplification is common with radio signals, so more expensive software defined radios will have an LNA on board: examples are the $150 SDRPlay and $300HackRF. Flightaware's ProStick also has a preamp, but that dongle is aimed at ADS-B enthusiasts, not for general radio use.
Cheap preamps are available online, such as various wonders from the Far East, often selling for less than $10. I've always stayed away from them, so can't comment from personal experience.
Satellite or TV preamps might look like a good idea, but despite trying a few I consider them unsuitable for RTL-SDR use: cheap versions have high noise figures, better ones cost just as much as a dedicated RTL-SDR preamp, but offer less signal amplification. What's more, the upper amplification range might stop at 1 GHz, so bye-bye ADS-B airplane position signals.
I've tested and use the following preamps:
Janilab preamp: $25 shipped, 0 to 3000 MHz, 2.1 db Noise figure, easy power connection, manufacturer link.
LNA4ALL: $28 shipped, 28 to 2500 MHz, 1 dB Noise figure, many options for power incl. bias-T, manufacturer link.
LNA4HF: $28 shipped, 150 kHz to 30 MHz, 1-2 dB Noise figure, lots of power options, manufacturer link.
An easy and well-performing setup for $60 is an rtl-sdr.com dongle with a bias-T enabled LNA4ALL, post here (link).
The HackRF (review link) features built-in bias-T and the LNA4ALL (review link) can be ordered with a suitable modification direct from the manufacturer.
The SDRPlay (review link) also comes with an LNA onboard for half the price and better performance than a HackRF.