Final answer:
A compass works by aligning itself with the Earth's magnetic field. Lodestone, a magnetized form of iron-oxide, can orient itself in a north-south direction, making it useful for navigation.
Step-by-step explanation:
A compass works by aligning itself with the Earth's magnetic field. The Earth has a magnetic field similar to that of a bar magnet. When a compass needle, which is magnetized itself, is in the presence of a magnetic field, it aligns itself in the same direction as the field. Lodestone, a magnetized form of iron-oxide, was used as an early navigational compass because it could orient itself in a north-south direction.