When to use delaycompress option in logrotate?

Your understanding of copytruncate is correct, but the wording in the manpage for delaycompress is a little misleading. More properly, it should say “when some program cannot be told to immediately close it’s logfile” — for instance, if you’re using sharedscripts and the script sends a signal to the process using the log when all the log files have been rotated.

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