  We construct and study a natural compactification $\overline{M}^r(N)$ of the
moduli scheme $M^r(N)$ for rank-$r$ Drinfeld $\F_q[T]$-modules with a structure
of level $N \in \F_q[T]$. Namely, $\overline{M}^r(N) = {\rm Proj}\,{\bf
Eis}(N)$, the projective variety associated with the graded ring ${\bf Eis}(N)$
generated by the Eisenstein series of rank $r$ and level $N$. We use this to
define the ring ${\bf Mod}(N)$ of all modular forms of rank $r$ and level $N$.
It equals the integral closure of ${\bf Eis}(N)$ in their common quotient field
$\widetilde{\MF}_r(N)$. Modular forms are characterized as those holomorphic
functions on the Drinfeld space $\Om^r$ with the right transformation behavior
under the congruence subgroup $\Ga(N)$ of $\Ga = {\rm GL}(r,\F_q[T])$ ("weak
modular forms") which, along with all their conjugates under $\Ga/\Ga(N)$, are
bounded on the natural fundamental domain $\BF$ for $\Ga$ on $\Om^r$.
