The earth's magnetic field, as with any magnetic field, can be resolved into a vertical and a horizontal component or vector, at any point in the field. At the equator, the horizontal vector is the major or strongest component, and the vertical vector is the smallest or weakest. At the magnetic North and South Poles, the vertical component is the dominant vector. Magnetic sensing compasses, both conventional and fluxgate, use the horizontal component to indicate direction. The result is that the compass sensing elements "dip" vertically, introducing significant heading errors.
The vertical dipping effect increases gradually from the equator in both northerly and southerly latitudes. It becomes seriously troubling at about 80° latitude, introducing errors of roughly 3° for every degree of dip. Above and below these latitudes, dip angle can render magnetic compasses all but useless. Suspending the sensing element in a fluid dampens but does not eliminate this effect.