When it's localized to be a compass but really isn't meant to be used the same way.
The Fantastic Compass is the device's name in English but if I were to directly translate that into Chinese well compass is 指南针 or literally the needle that points south. (Because of how the magnetic poles of Earth work geographic north is closest to magnetic south.)
Meanwhile the Chinese version names the device 太威仪盘 where 太威 means something like Fantastic but 仪盘 actually means instrument panel like the gauges on your car. But a more period accurate definition might be the Luopan which gets translated as a "compass" but if we take a look-
Geez what am I looking at? 
So there is a compass a 指南针 in the middle of this forest of lines and text. You can definitely use it as a compass since that needle will definitely point you in the right direction. But this Luopan thing is not meant for that at all. Actually you use the compass part to orient you properly for the rest of the thing's functions. That's why some experts have likened it to the Greek Astrolabe.
But unlike the Astrolabe that's meant for astronomy in the ancient world the Luopan is meant for Taoist Feng Shui which is sometimes considered a form of geomancy. (Hmmm an Astrolabe for Geo-mancy. Be still my Monax shipping reflex. 
)
Anyway just like an Astrolabe you have a bunch of dials to calibrate and once you do it tells you stuff. In the Astrolabe's case that would be distances and positions of celestial bodies like the Classical Planets. For the Luopan that would be determining proper orientation for say a room or- Yeah I have no idea how to use one of these things. There's tons of info on it that all require deciphering and the information I found either sounded as confused as I was or went way over my head so that's all you're getting from me lol
But from what I could understand I think it does make sense how it's used in Genshin. Boyang and Bosacius used the compass to create a spatial rift (actually more like a localized warp in spacetime considering the time dilation effects) that trapped the Khaenri'ahn forces in the Chasm Bed where something weakened them and also created hallucinations to eventually consume them and the forces of Liyue. Eldritch vibes yo. 
This is also why we never really use it like a compass either do we? In the final Domain we control where the needle points and that takes us to different points in time where we find other members of the group. And to escape Xiao and Yelan just activate it and Xiao uses up his yaksha energy to power it.
While that part is just fantasy magics for the epicness I think the idea of controlling where the needle points works similarly to how the real Luopan would. You start by letting the compass part point to magnetic south. Then there are 2 strings that crisscross over the compass. You have to rotate the dial so that the strings line up with a red line on the compass and then you decipher what that means. So while we are moving a needle in the Fantastic Compass it's probably meant to relate to moving the dial and the strings. That orients us to sync up with the next member of the group across spacetime.
I wonder as the game progresses how important this stuff from Yelan's family will be. Was it just a one off shoutout to Bagua and Feng Shui? Or will it be some other angle for the characters to figure out what's going on in the story? I guess we'll wait and see!
Tips and Tricks from a Super Casual Genshin f2p
