Compound exercises are muti-joint exercises that may use several muscle groups. Movements like Cleans, Squats, Push-ups, etc. require movement at several joints which utilizes more muscle groups. Isolation exercises are single-joint exercises that typically utilize one muscle group. Exercises such as bicep curls, leg extension, etc requires the movement at only one joint which requires less muscle.
Classification is simple, but utility is often misunderstood. Compound exercises utilize the most muscles and therefore are the most taxing physically and neurally. This is one of the main reasons you do compound exercises before isolation exercises. Also, because they utilize the most muscles, they are predominantly used for heavy strength. This is where my progressive overload obsession comes in. The more you squat over time, the more your overall lowerbody muscle mass will grow. When it comes to conditioning, compound exercises have the higher oxygen uptake. Whether your goal is improving aerobic capacity or burning calories, compound exercises are superior and it's not close.
Isolation exercises have their place and it would grind my gears when people over or under utilize them. Because they "produce the most muscle damage" or "they're a waste of time. The truth is they're not WRONG, but they're not RIGHT. Isolation exercises like the bicep curls allow for the muscle experience more volume. My belief is that they are for muscles that may need more volume because they are either underdeveloped or they just want to emphasize them. For these exercises, progressive overload is important, but I manipulate sets by focusing on either muscle damage via tempo, or metabolic stress via dropsets. Nevertheless they should be done at the end where fatigue is not a major issue. For conditioning, they should be mostly used for improving local muscle endurance, but for aerobic capacity and caloric expenditure, you're wasting your time.