Island clusters are being generated randomly, far away from each other. Sailing between clusters can take several days. It is truly an astonishing and calming feeling to spot the first island after days of fighting the elements out on a stormy ocean.
While sailing between clusters, the compass is of no use to the player because there are no reference points such as islands, for triangulation. The only use for the compass in this case is to keep track of the direction the player is heading to. Should the player get lost at sea, we recommend watching the behavior of Seagulls. In the morning, they fly from the closest cluster to the open sea to fetch food. In the evening, they return back to land to sleep.
Also, the weather system (wind, waves, underwater streams) is sneaky and can drift the raft in any direction without the player noticing it. For example, the player could be sailing towards the East (while looking at the compass), but the wind and the waves are pulling the raft (slowly but surely) also towards the South.
The global position on the Earth has two dimensions: Latitude (measured in the direction North/South) and Longitude (measured in the direction East/West). Each dimension has its unique measurement methodology which is implemented in the game mechanics. The playable area in story mode (not implemented yet) is represented by the dark blue squares in the image above (showing the pacific ocean).