I share the opinion of many others that it is not needed, in my mind it makes parts of the game that are really well designed, completely pointless.
Here's the thing, the terrain and surroundings in Skyrim are so well crafted and unique that if I was shown a screenshot from outdoors without any indicators, I could easily point out where this was. The flora and the landscape in each region is so characteristic that as long as I have played the game for some time, I will be quite able to orientate myself in the surroundings. This is a fantastic merit and praise to those who designed the terrain and landscape, and then enter the compass, quest markers and completely ruin all of their hard work by making it pontless for any other purpose than eye candy.
There was the chance and opportunity to make the players feel like real explorers, like they are getting to know a real world, learn to recognize paths, landmarks and features in the terrain. If I feel lost, I can just climb up to a high point and easily locate a landmark that I will recognize.
Even more disappointing is that I find treasure maps in the game that show that by no means do I need the quest markers, the maps are very simple and intentionally a bit flawed, but I have no problems at all locating the point to which the maps direct me, even without any other help than a few landmarks and simple map indicators. So many quests could be designed around directions like these without causing frustration or problems, as long as I know my region, I will easily find the place.
To me, it's not the handholding in itself that makes me negative towards the compass, I don't mind it so much within dungeons, but it is the indirect insult towards the landscape and terrain designers that says that despite all of their work and attention to detail, people still need a GPS to understand where they are in this unique, handcrafted, world they have created.
