Compound Exercises, are those that involve more than one joint, and often several large muscle groups. Compound exercises move the body through more than one joint movement, while isolation exercises only move the body through a single-joint movement. Take the the barbell squat for example. This "king" of all compound exercises moves your body using a majority of your muscle groups and bends you at your ankles, knees, waist, hips, and to some degree, even your shoulders.
Compound exercises allow you to lift heavier weights and work more muscle groups at the same time than isolation exercises. This saves you precious time in the gym while stimulating the maximum amount of muscle fibers. In addition, compound exercises, due to the increased amount of muscle used for the movements, are better at sending your endocrine system a "distress call" to pump out more anabolic hormones such as testosterone and growth hormone.