Plain English Meaning
A compass that uses an electrical sensor in a quiet part of the airframe to detect magnetic north, then sends that heading to a display in the cockpit. Because the sensor is mounted away from engines and electronics, the heading it shows is steadier and more accurate than a traditional float-and-fluid magnetic compass.
Full Definition
An electrically powered compass system that senses the horizontal component of the Earth's magnetic field using a fixed sensor unit (the flux gate) mounted in a wingtip or tail where magnetic interference is low. The sensor detects the direction of the magnetic field and sends that information electrically to a indicator in the cockpit, providing a stable, slaved heading that drives instruments such as the or (HSI).