Declination and Inclination
Compasses do not point to the true north pole, but to the magnetic north pole. Declination is the angular difference between magnetic north and true north which varies depending on your location.
Some compasses allow you to adjust the amount of declination compensation, independent of the housing. This reduces the chance of adjustment errors and the need to mentally calculate the difference. The magnetic north pole moves slowly over time, so the difference between magnetic north and true north depends on where you are and what year it is. Maps show the local declination and the rate of change so you can compensate for the difference.
Good quality compasses are balanced for the particular latitude zone where they are sold. This means most compasses sold in Canada do not work in Australia. Why? Inclination refers to variations in earth's magnetism based on zones of latitude (the distance from equator). The degree and direction of inclination can tilt a compass needle off-balance on its pivot, causing large errors, and in extreme cases it prevents the needle from turning. Newer, more expensive "global" compasses have a non-magnetized needle attached by gimbals to a pivoting centre magnet. This allows the compass to read accurately at any latitude. Globe-trotting travellers should look for this feature or buy another compass to use at a different latitude upon arrival.
Read more about Compasses and Altimeters.