A small bubble appearing in a fluid-filled handheld compass is generally not a problem. It develops due to changes in temperature and atmospheric pressure, usually getting larger with increasing elevation and decreasing temperature. I live at 7,000 feet elevation and I own several compasses. They all have bubbles here, but when I descend to lower elevations the bubbles disappear.
Manufacturers of handheld compasses, including the popular Silva brand, recommend replacing the compass or having the fluid-filled capsule replaced if a bubble ¼ inch in diameter or larger develops. These large bubbles are indicative of a slow, invisible fluid leak.
Keep in mind that the purpose of the fluid is to create dampening effect. The compass would still work even if no fluid was present as long as the bearing is good enough to allow the needle remained free to swing without scraping the top or the bottom of the compass housing. I lost all the fluid from a Silva Ranger CL and discovered that it definitely does NOT work with out fluid. The needle just jerks around and stalls even if it is not touching the housing.
A large bubble that still covers the pivot point of the needle usually just affects the speed at which the needle comes to a rest, but there may be some tension effects that could slightly affect accuracy even if the needle is not scraping the housing. Replacing or repairing a compass with a large bubble is a must because it means there is a leak and eventually you will lose all the fluid and the compass will become useless.
Small bubbles in mounted compasses, including marine compasses are potentially more problematic than those in a baseplate compass—mostly because the stakes are often higher. Hiking a few miles out of your way is usually not as serious as boating off course.
A few compass designs incorporate the presence of a bubble to help the user keep the compass level, but this is very uncommon. Most mounted compasses should not have a bubble. Here is an excerpt from the Richie Navigation FAQ for their popular marine compasses:
“Ritchie compasses are designed to not have a bubble; if you see a bubble, there is a leak. This may seem unlikely to you, because you may not have noticed any fluid escaping from the compass. Ritchie compasses are filled with Isopar L® or odorless mineral spirits. Both tend to evaporate before it is noticeable. Bubbles may cause a number of problems, so it is recommended that you have the compass repaired as soon as possible.”
Diving compasses are another type of compass that warrant a little extra attention if a bubble develops. Like with a handheld, baseplate compass, the primary concern is uneven pressure or surface tension causing the needle—or the card in this case—to touch the housing and not swing freely. So, a small bubble is not a big deal, but then again, a compass is among the least expensive items in you diving gear, so consider replacing it to be on the safe side. If you do, keep your old one to test beside the new one—it will enhance your experience and may help you provide some good advice to a dive buddy someday.