Compasses have a variety of designs based on the manufacturer. The simplest design is a locket within which there is a dial pointing to the magnetic north. The compass usually has magnetic needle or needles that have been horizontally mounted and are free to pivot until they are aligned with the earth's magnetic field.
A compass looks like a cross with a letter at each point indicating the directions north, east, south, and west. There is a moving arrow inside driven by the Earth's magnetic force to always point north. You can find more information here: http://www.solarnavigator.net/compass.htm