The Vegvísir (Icelandic for signpost) is a symbol that comes from the Icelandic magic tradition of the Galdrastafir. As a symbol it can be found in the Huld manuscript from the 19th century with a specific representation. There it says: "When that symbol is guided, the bearer shall not be lost in storm or wind, even if the path ahead is unknown".
The frequently used name "Viking compass" is misleading. It is unlikely that this sign was known at all at the time of the Vikings. The Huld manuscript was written around 1860 and thus far after the end of the Viking Age (1066 AD). So far, there is no evidence for an earlier use of this sign.
That is, a use before that or even a Viking Age use is unlikely, though of course never completely ruled out. Some researchers assume that the sign developed later and was under the influence of Western magic traditions. This influence can also be observed in other Icelandic magic signs.
A neo-pagan interpretation of the sign is as follows: Around a center, eight directions are represented in a star shape. Together with the center, the eight rays are said to represent the nine worlds of Norse mythology:
Upper world: Wanenheim, Asgard, Albenheim
Earth: Jötunheim, Midgard, Muspellsheim
Underworld: Blackalbenheim, Helheim, Niflheim
This modern interpretation is based on an analogy to the world tree Yggdrasil.
More recent representations show the center with an empty circle. The original representation is said to have been square. Interpretations as a circular symbol can also be found.