The case can be turned round in a complete circle and is marked with lots of little lines and some letters. N is for North, S is for South, E is for East and W is for West, although once you know where North is, you can work out all the other directions yourself.
For their first lesson, they had to hold the compass flat in their paws, and wait for the needle to stop moving. Then they turned the compass case around gently until the letter 'N' on the ring was lined up with the coloured end of the floating compass needle.