Squelch is, as Ron indicated, a threshold at which the demodulated audio is either muted or umnuted (present or not present at the audio connector). The squelch circuit relies on one or more factors, depending on the quality and cost of the receiver; received signal strength (in microvolts or uV), pilot tone, also called tone grip; and signal to noise. The idea being that the threshold for audio quality at the output is dependent on the overall local RF environmental noise floor, the receiver's sensitivity and selectivity, other nearby carriers (both physically and in frequency), the anticipated RF signal level of the transmitter reaching the antenna, and the user's minimum acceptable audio quality. Thus, squlech is very situation dependent and the reason it's [usually] user adjustable.
You don't say specifically what kind of problems you're experiencing, but being in a highly RF congested area, you're probably having other issues in addition to any squelch settings; are you sure you're using a clear frequency and necessary bandwidth, and if there are multiple wireless units, have you performed an intermodulation product calculation? Other possibilities are transmitter frequency error and/or the receiver being out of alignment.
Production Radio Rentals