Which phenomenon explains why a compass needle points toward magnetic north?

Earth’s magnetic field explains why a compass needle points toward magnetic north.

A compass needle is a small permanent magnet. Earth’s field exerts a torque on it, causing the needle to align approximately along the local field direction. The end marked north is attracted toward the region near Earth’s geographic North Pole that acts as a magnetic south pole.

Earth’s field is generated mainly by motion of electrically conducting molten iron in the outer core, a process known as the geodynamo. The field is not perfectly uniform, so compass direction varies with location and is affected by magnetic declination.

A compass does not point exactly to the geographic North Pole. Navigators account for the angle between geographic north and magnetic north, which changes slowly over time.