Monitoring volume level

The volume level of your music presents a pair of tricky problems.  (1) With only a few high-tech exceptions, the volume level can be too loud directly in front of the speakers but too quiet at points farthest from the speakers ("I can't hear the beat").  (2) And as your song alternates between its loud and quiet sections, ambient party noise usually drowns out the quieter passages, then blasts your dancers painfully during the loudest parts.  This doesn't happen in the quiet of a concert hall or at home... it's a dance party dilemma.

Because of these two problems, there's a very narrow range of acceptable volume.  Any louder and it's hurting the ears of those closest to the speakers; any quieter and it's inaudible for other dancers.  Then as most tunes decrescendo and crescendo, your music quickly goes from inaudible to painful, because of the very narrow range of acceptable volume.

Your responsibility as a DJ is to constantly monitor the volume level, lowering it during the loudest parts and raising the volume during the quiet passages.  A concert purist might complain that acoustic music doesn't do that, but here music is functional and inspirational to dancers, and must be modulated to best support the dancers.

This responsibility as a DJ might involve some self-sacrifice — foregoing the pleasure of dancing yourself.  I'll often be at a DJ'd dance and be surprised that the DJ let the music suddenly get painfully loud, or ineffectively quiet.  Sure enough, each time the DJ is out having fun on the dance floor, away from the volume control.  If you want to dance, ask someone to take over the volume control for you.  My solution, if it's one I know I'll want to dance, is to record a version in which I've adjusted the volume peaks and valleys ahead of time.

You already know this next point, but just to be thorough, the DJ often sits in an acoustic shadow behind the speakers, so the music doesn't sound as loud to the DJ as it does to the dancers.  During your first song of the night, go out onto the dance floor to make sure the sound isn't blasting those closest to the speakers, and not too quiet for those at the far end of the hall.  Check again when the floor becomes more crowded, since bodies absorb sound and change the acoustics of the dance floor.

Novelty vs Familiarity

Do you play mostly familiar favorites, or mostly new music that hasn't been heard before?  Or a mix of both?

I strongly recommend a mix of both.  Every group of dancers is different, so this isn't an absolute rule, but most dancers prefer a mixture of familiar favorites and new music.

Everyone has their favorite tunes that make them happy.  And people love having a chance to dance to popular tunes they've heard.  So don't leave those out.  Furthermore, the better leads want to match their variations to the breaks in the music, which only happen when they know the break is coming.  Similarly the better follows like to add stylistic flourishes and footwork modifications to match the musical changes.  So the more experienced dancers, both lead and follow, have a strong preference for familiar tunes, for these reasons.

Then new music is always exciting for most people, including the experienced dancers, so also include those in your mix.

DJ's more often err on the side of not enough familiar favorites (or worse, none).  Those are usually the DJs who are grandstanding, showing off their immense music resources.  That's their version of "Look at me! Look what I have!"  instead of selflessly giving the dancers what they want.  Then they wonder why the dancers don't come back.  But erring the side of only old favorites isn't much better, in my opinion.  Give them plenty of both.

This recommendation is specifically for social dance music.  If you're a psy-trance or techno DJ, then your following will want the latest music they've never heard before.  Conversely some dances have period themes, like all-fifties, disco or all-eighties.  And a wedding couple may request only their old favorites at their reception dance.  Each situation is different.

Variety and Pacing

You want to give your dancers a contrast between high and low energy.  Obviously you don't want to play two tunes in a row for the same kind of dance, at the same tempo.  Have you ever danced to a big band that played three swing or foxtrot tunes in a row with the same tempo?  The bandleaders were clearly not dancers.

Be aware that dancers will want to catch their breath after a fast tune, so maybe follow it with a slower one.  And they don't want to be lulled to sleep with too many slow songs in a row.  But you don't have to strictly alternate fast and slow dances.  Some DJs like to build the energy over several dances, bringing the dancers higher and higher but without exhausting them (yet).  Similarly, a string of several quiet dances can effectively set a deeper mood while also building up a desire to be hit with a high-energy set.

The art is to find the perfect pace, without too many fast or slow dances in a row.  If you want a safe rule of thumb (which has exceptions), don't play more than one or two really fast tunes in a row, and don't play more than two or three slow tunes in a row.