How a Compass Works
There is a huge magnetic field around the earth. It is huge, but it is not very strong. The magnetized needle in a compass is aligned with this magnetic field. As the image below shows, the composition of the earth acts as a huge bar magnet sitting upside down in the middle of the planet. Since its South end is at the north pole and its North end is at the south pole, the North end of a compass needle is pulled north.
There are four cardinal points on a compass - North, South, East, and West. When reading a compass, and telling other people directions, you need to wipe "right" and "left" out of your vocabulary. Right and Left are relative directions and differ depending on your location and direction, but the cardinal points are constant.
The direction halfway between North and East is an intercardinal point and is called North-East. The other three intercardinal points are South-East, South-West, and North-West.
Finally, there are secondary intercardinal points halfway between each cardinal point and intercardinal point. These are North-North-East, East-North-East, East-South-East, South-South-East, ... and so on. With these directions, you can give someone a fairly good idea of what direction they need to go.
The circle of a compass face is split into 360 marks called degrees.