A compromise is when two (or more) people make an agreement or solve an argument by both of them giving something up. They don't get 100% of what they want, but it means both people are 50% happy. This is often better than a win-lose situation.
For example- say a brother and sister both really want the last cookie, so instead of fighting over it, they agree to split the cookie in half. They each sort-of get what they wanted.