A compass points to magnetic north, not true (geographic) north — a distinction that matters enough for real navigation that quality compasses include a way to correct for it.
Magnetic declination is a real, location-dependent difference
Magnetic north — where a compass needle actually points — and true north — the geographic North Pole, which maps are typically oriented to — are not the same location, and the angular difference between them (called declination) varies depending on where you are in the world, and even changes gradually over time at a given location. In some places this difference is small enough to matter little for casual use; in others it can be large enough to cause a meaningful navigation error if not accounted for, particularly over longer distances. A compass with an adjustable declination setting lets this correction be dialed in once for a given region, after which the compass reads directly in true north terms without needing manual mental adjustment for every reading.
Baseplate compasses suit most general navigation needs
A baseplate compass — a clear plastic base with a rotating compass housing — is the standard, versatile choice for hiking and general land navigation, allowing straightforward map orientation and bearing-taking using its ruler edges and rotating dial. This type covers the needs of most recreational hikers and backpackers well, without needing more specialized features found in compasses built for a specific niche use.
Sighting mirrors improve bearing accuracy for precise navigation
A sighting mirror lets you simultaneously view a distant landmark and the compass dial, improving the accuracy of taking a precise bearing compared to a basic baseplate compass without one — genuinely useful for serious backcountry navigation or search-and-rescue-style precision, but more capability than most casual hikers need for typical, well-marked trail use.
A compass alone doesn't replace understanding how to actually use it
A quality compass with all the right features doesn't help much without knowing how to actually take a bearing, orient a map, and follow a course — these are learnable skills worth genuinely practicing before relying on them in an actual emergency or serious backcountry situation, not something to assume comes automatically with owning the right equipment. Many hiking and outdoor organizations offer basic navigation courses specifically because this skill gap between owning a compass and knowing how to navigate with one is common and worth deliberately closing.
The one thing people forget
Don't rely on a phone's GPS or compass app as a sole navigation method in genuinely remote areas, since battery life, physical damage, and lack of cell signal (which some navigation apps rely on for map data, even if GPS itself doesn't need cell signal) are all real failure points that a physical compass and paper map don't share. Carrying a physical compass and map as a backup for serious backcountry travel remains a reasonable practice, not outdated caution.