What is Compiling?
Scrivener was conceived as drafting software. (No, not for your fantasy football draft.) To that end, the act of writing is largely separated from the act of formatting. This means you can write your masterpiece in Palatino, 16, single-spaced, with no indents, but later compile your masterpiece in perfect submission layout with 1” margins, double-spaced, in Times New Roman, 12-point font.
Compiling collates the individual documents and folders that make up your manuscript. That is, compiling gathers all the separate pieces—whichever ones you choose from the Draft/Manuscript folder—into a single output file, formatted as desired.
The Compile window is where you adjust the settings to tell Scrivener what type of file you want to create (e.g., EPUB, DOCX, PDF) and how you want the file to look (e.g., 8.5”x11” paper with 1” margins, double-spaced, left justified, with page numbers centered at the bottom).
Below is the same Scrivener project formatted for two different purposes. The first is formatted as an ebook and output as an EPUB file. The second is formatted for paperback and output as a PDF.
What about Exporting?
Exporting usually implies saving the current file into a different format that’s usable by another software program. Technically, while compiling might be considered a form of exporting, it provides far more options for your final result.
Scrivener's export function is meant as a quick, easy way to save a document or two, and provides limited options for appearance or file type. I generally use Export to output a single page or scene that requires no formatting beyond what I have in the editor, for example, a page of notes for myself or a scene for a critique partner to read.