Question

how does a magnetic compass show the direction

Answer 1

in north direction there is south pole of earth magnet so north pole of needle attracted to the south pole of earth's magnet which is in north direction of upper earth in this way it always point north direction....
it is quit confusing to explain.... but I know it well

Answer 2

when a magnetic compass is placed on a horizontal surface and the needle is allowed to come to rest, the needle aligns itself along north-south direction