Joint compound has three major functions: filling large cavities; as an adhesive for embedding tape over a seam between two boards of drywall; and coating over, or topping, previous coats to leave a finished surface suitable for paint. When you buy joint compound, read the labels carefully to determine the finishing activities for which that particular brand or variety works best.
Ready-mixed joint compound falls into three basic categories: Taping joint compound dries hard and works well for embedding paper drywall tape over seams. Topping joint compound is less durable but shrinks the least and sands easily, so it is effective for covering taped seams and providing a final, smooth finish coat over your work. All-purpose joint compound is a good compromise between the two types.
Quick-setting joint compound dries via a chemical reaction initiated by mixing the powder with water, much like how concrete cures. The resulting mixture dries within five to 90 minutes, depending on the variety, making it an effective choice when you're rushing to meet a deadline. But creating a smooth finish with quick-setting joint compound is difficult because the mixing process often leaves the compound clumpy. Also, quick-setting joint compound is difficult to sand.
If you use quick-setting compound, cover it later with topping joint compound, which works well for creating smooth, even coats. For example, you might embed paper tape in quick-setting joint compound, apply a thick coat over the tape to hide it and let the compound dry for the specified time. After that, apply topping compound in a smooth coat over the dried joint compound and wait a day for it to dry. This strategy allows you to apply three coats -- the tape coat, the filling coat and the topping coat -- in a single 24-hour span.
If your budget is low or your project is small, all-purpose joint compound can fulfill all your basic needs. Topping compound, on the other hand, doesn't work well for anything but creating a smooth final finish. The major disadvantages in relying exclusively on all-purpose joint compound are that it is relatively difficult to sand and it shrinks more, meaning you might have to apply extra coats to fill large gaps and holes.