Our Earth is like a giant magnet surrounded by a huge magnet field.the regions near its geographic North pole and South Pole act like the north and south poles of a bar magnet having the strongest magnetic field at its ends.
To best understand Earth's magnetic field, picture a bar magnet and a bunch of iron filings dumped around it. The filings form lines running from the north pole of the magnet to the south pole of the magnet. We call these lines magnetic field lines. The compass is acting somewhat like the iron filings and is pointing towards the north pole. The actual cause of the magnetism has to do with the interior of the Earth.
We know that at the center of the Earth lies a molten metallic iron rich core. The outer portion of this core is molten. We also believe that this core is spinning. Our knowledge of the details of exactly what causes the magnetic field is sketchy but it is believed that the metals in the core have many loosely bound electrons and that these particles can conduct electricity. It is this mass of moving electrons which produces the magnetic field.