Compound path allows several paths to be combined into one path. We can convert it to one path by high lighting.

Now, highlight the compound path and photo, then select Object > Clipping Mask >

As you saw, compound paths combine all selected paths into one. You can also use this tool to make some pretty cool designs quickly. Play around with it by taking a few basic shapes and stacking them on top of each other. Then select Object > Compound Path > Make.