Esteban and Hung, I don't know how it works, but I suspect there would be a coil that picks up the magnetic flux and the compass aligns to it. I did find it interesting that they could detect an area where an automobile had been parked, much like dowsing rods can pick up where a target had been--only the rods (and human body) have much more sensitivity.
At first I thought it might have a frequency generator and the compass worked like an L-rod, but the old post you have says it is just a mag. So it could be a take-off of the magnetic distortion/sunspot detector device sold at
http://amazing1.com/projects.htm#MGD10 Dell says, this will get touchy with solar activity, maybe even unusable I don't know.