Compound paths allow you to cut holes in objects. Think of a donut shape where you can see through the hole. You can edit these paths independently with the direct selection tool.
You can release the compound path via Object > Compound Path > Release. This releases the path and makes them all the original shape.
What is a compound path – 00:10
Why use a compound path- 00:17
Select objects – 00:26
Object Compound Path – Make – 00:32
Release compound path – 00:53