Magnetic compass is an instrument that uses a magnetic needle that points to the magnetic north. This instrument is used for navigation.
There are actually TWO North Poles - the one at the top of the earth (Physical North) and the other which is known as Magnetic North. Magnetic North is actually in northern Canada, and that is where compasses point to. If you were standing exactly on top of the magnetic north pole, your compass would point nowhere. The magnetic needle would spin or point in random direction because its natural inclination would be to move straight down.