I am trying to figure out the difference between uniting with the pathfinder tool and making something into a compound shape which is an option on the pathfinder tab section. I know with unite you can get shapes into one but what is the point of compounding it to a shape and then expanding? Isn't it the same?
The Pathfinder Panel, by default, creates altered objects and then expands them. You can hold the option/Alt key down when clicking a panel button and the shapes will not be expanded (similar to using the Effects menu item).
Any pathfinder operation may or may not create a compound shape. It all depends upon the original artwork. If the artwork has areas where a "hole" is needed in the middle of other objects, then a compound shape is needed to ensure that "hole" acts as a proper counter.
The Pathfinder Panel menu item for
Make Compound Shape is exactly the same as holding down the option/Alt key and clicking the
Unite button on the panel or choosing
Effect > Pathfinder > Unite. All 3 of those commands do the same thing. They tell the objects to unite but not expand. This leaves the artwork in a "live" state so that individual objects can be moved or altered and the appearance remains as if they were united.
Note: in Illustrator CS3 or earlier the Option/alt key and Pathfinder operations acted in the exact opposite manner. Adobe reversed the operation commands in CS4.