Variation: Is the angle between the true and magnetic meridian, that is to say, the angle that the freely suspended magnetic needle makes with the True Meridian. If the magnetic needle is drawn to the right of the true meridian, the variation is termed Easterly and if the needle is drawn to the left of the True Meridian, the variation is termed Westerly.
Variation differs from place to place but does not change with the direction of the ship’s head (course of the ship)
Deviation: A ship is made of steel, acquires a certain magnetism and so inherently has an effect on the magnetic compass. In other words, the compass needle on board does not lie on the magnetic meridian but is deflected on one side or the other because of the ship’s magnetism. Although corrective magnets are inserted in the housing (also called binnacle) of the compass to counteract this, the system is not perfect because the ship also loads steel cargo which makes the error variable. Also, the error thus caused is found to vary as the ship points in different directions (different headings). This error is called ‘deviation’ and is named East if the compass needle is drawn to the right and West if the needle is drawn to the left.
Compass error is, simply, the combination of the errors of Variation and Deviation, and is applied by the navigator to the compass reading to get the corrected compass reading.