World source is compiled to the virtual machine on the fly, when the code is run. Once a piece of code is compiled, it can be run again and again on the virtual machine without further compilation.
Code can also be recompiled in a different context. An example from the World prompt:
w> a: b: 0
== 0
w> f: func [v] [a + b + v]
w> compiled? :f
== false
w> f 1
== 1
w> compiled? :f
== true
w> c1: context [a: 1 b: 2]
w> c2: context [a: 1 b: 40]
w> compile/at :f c1
w> f 1
== 4
w> compile/at :f c2
w> f 1
== 42
w> compile :f
w> f 1
== 1
