A compass is an instrument for navigation and orientation. It has a magnetic needle or a card that can rotate freely, and if positioned horizontally it will align itself with the magnetic field of the Earth and point Magnetic North-South. 

The first compass, according to historyofcompass.com, was invented in China during the Han Dynasty between the second century BC and first century AD. At first, it was used for divination, fortune-telling and geomancy, for finding precious gems and in Feng Shui but in time people discovered that it can be used for navigation and orientation. People knew about magnetite even before then, but it took centuries for it to get at least some purpose.

Earliest compasses were made of lodestone, a particular form of the mineral magnetite. The first compass was a lump of lodestone that was tied to a rope and left to hang freely. Others were also made from lodestone but were shaped like a spoon or a ladle whose handle was made to point south. Some were made to work when left on the ground while others had a plate on which it stood and which had sides of the world marked on it. 

China’s military used a compass for navigational orienteering in the 11th century and for naval orienteering in 12th. Compasses were then made of magnetised iron instead of lodestone and were called "south pointing fish” which was a magnetised iron fish that floated in a bowl of water and pointed south. Later they invented a turtle the compass, which was a type of dry compass. Its main part was a wooden turtle which had lodestone in it which was fixed with wax and had a needle sticking out. Wooden turtle balanced on a bamboo needle, which allowed it to rotate freely and the needle pointed north. 

According to fourinventions.com, the first dry mariner’s compass was invented in Europe around 1300. It has three major elements. The first one is a freely pivoting needle which stands on a pin and is enclosed in a box that has a glass cover and a windrose that has cardinal directions - North, East, South and West. That box is placed inside a gimbal so it can rotate freely and that system in another gimbal. That way the box that holds magnetic needle can always stay horizontal if weighted on the bottom. 

The Islamic world imported the compass during the 13th century and used it for the same purposes as the rest of the world: astronomy and seafaring. They also invented a type of compass for use in prayers. They made a dry compass for use as a "Qibla (Kabba) indicator” to find the direction to Mecca for their daily prayers.

Compasses are still used today but in improved forms, made from modern materials.