ALC seems to cause some confusion, specificly the meter. Full ALC reading is roughly in the middle of the meter. The full range is just past the S9 reading at +5dB in the scale above ALC (on the radios I have checked). While many think they are setting there levels correctly, they are in-fact almost over-driving and only getting distorted audio on the peaks, which may not be noticed by many.
The cause for this confusion is that the manuals don't seem to make it clear where the ALC scale is. See also M0WGF - Setting the Yaesu FT991 microphone gain for sideband operation.
Also setting the ALC for digital mode has similar confusion. Some modes may be fine with a little bit of ALC, while FT8 and some others will cause some splatter. I'm not sure, but it seems that atleast some of the Yaesu radios the first bar (pixel?) or two show before the ALC kicks in. I've not been able to measure this, and I've had some inconsistancies while testing this. It does seem that you start to lose linearity here, so the ALC may be kicking in but is gradually coming in. See also FT8 and splatter and the ugliness of ALC, and some info about the ALC is here: FT-991/A Main Menu Settings
I think in summary with the digial modes, it depends on how the digital signal is interacting with the ALC.