In addition to aiding in navigation around the map, the Compass is helpful for making use of the in-game clues that mention cardinal directions, including the location of Lifepod 4, Lifepod 6, and Lifepod 7.
Obtaining the Compass Blueprint
The blueprint for the Compass is found in a Databox in Lifepod 3.
Fabricating the Compass
The Compass is fabricated from 1x Copper Wire and 1x Wiring Kit.
Using the Compass
After fabricating the Compass it will automatically be equipped. It can be seen in your Equipped inventory screen. It can also be un-equipped from this screen by clicking on it, which will place it into your Inventory.
With the Compass equipped, the HUD now displays a compass just below the depth meter.
If the unequipped compass is dropped it looks like one of the Databox cards that contain a blueprint.