A compact frame is a design of bicycle frame that includes an angled top tube, angled seatstays and a seatpost that extends above the rest of the frame. The idea was popularised by Giant in their -CR range of bicycles.
The principle behind the compact frame is that it places the majority of the bike as low as possible, while still being a UCI approved bicyle. The lower center of gravity improves the bike's handling, and thanks to the fact that the bottom bracket is now closer to the seatstay and top tube, power transfer is also improved.
However, a lot of manufacturers have preferred to stick with a more traditional frame, as a compact frame places the rider fairly high, relative to the top tube, negating any center of gravity benefit during a hill climb as the rider is not crouched over the bike. They also tend to not be as stiff overall, due to the long seatpost, so even though the handling is objectively stiffer, the rider doesn't always feel as 'in control' as with other, more traditional, designs.