Christina,

the compilation check box is there so iTunes can properly sort the album 
according to the name of the compilation, as opposed to the names of the 
artists on that compilation. 

For example, a "Hits  of the 80s" compilation may contain 17 separate artists, 
but you don't want each of these artists to have one entry when you navigate by 
artists. The compilation check box would present the album as Various Artists: 
The Hits of the 80s and then present the compilation in its original form, 
grouping multiple artists under one album. 

Hope this answers your question.

Kevin


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