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Translation theory shares a number of concerns with what is commonly called communication theory. Perhaps the most important observation which the communication theorists have produced for translators is the recognition that every act of communication has three dimensions: Speaker (or author), Message, and Audience. The more we can know about the original author, the actual message produced by that author, and the original audience, the better acquainted we will be with that particular act of communication. An awareness of this tri-partite character of communication can be very useful for interpreters. Assuming that an act of communication is right now taking place, as you read what I wrote, there are three dimensions to this particular act of communication: myself, and what I am intending to communicate; the actual words which are on this page; and what you understand me to be saying. When the three dimensions converge, the communication has been efficient.
If we know, perhaps from another source, what an individual author's circumstances are, this may help us understand the actual message produced. Martin Luther King, Jr.'s "Letters from Prison" are better understood by someone who knows the circumstances under which they were written rather than by someone who is oblivious to mid-20th century American history. If we know information about the author's audience, this may also help us to understand the message itself. John Kennedy's famous, "Ich bin ein Berliner" speech is better understood if one understands the apprehensions which many West German citizens had about American foreign policy during the early 1960s (and, knowing the audience was German may help explain why he did not speak this sentence in English!).
Recognizing that in addition to the message itself, there are the two other components of author and audience, the interpreter attempts to uncover as much information as possible about the author and audience. This is why biblical scholars spend so much time attempting to locate the circumstances of a given epistle; they are trying to discover information about author and audience, which will help complete the understanding of the particular act of communication represented by the message.
At this point, an important warning needs to be expressed. For students of literature whose original audience and author are not present (i.e., dead), we only have direct access to one of the three parties in the communicative process: the message itself. Whereas we would be profited by having direct access to author and audience ("Paul, what in the world did you mean about baptizing for the dead?"; or, "How did it hit you Galatians when Paul said he wished his troublers would castrate themselves?"), it would be incorrect to suggest that we must have such access for any understanding to take place. Frequently one encounters the extravagant statement to the effect that "one cannot understand a biblical book unless one understands the author's (or audience's) circumstances." The problem with such statements is that they imply that we can have no understanding without access to information which simply does not always exist. We haven't any idea who wrote the epistle to the Hebrews, or why, other than what may be indicated in the letter itself. Does this mean that we can't understand it in any sense? I think not. We just have to recognize that information, which would assist the act of interpretation, is, in this case, missing.
Related to this warning is a second. For Protestants, scripture itself is authoritative. Our reconstructions, often highly conjectural of the historical circumstances under which a given biblical work was written and read, are not authoritative, by my understanding of Protestant theology. Those reconstructions may assist our understanding of the biblical text, but they are not, in and of themselves, of any religious authority.
Finally, we might add that the essential error of many exegetical theories is their exclusion of one or more of these three parties from consideration. While many important debates are continuing to influence interpretive theory, our evaluation of these debates would do well to retain a role for each of the three above-mentioned dimensions.