Alma here explains that the Liahona was a type, a shadow, a symbol of Jesus Christ and his word. When a people are faithful, then the words of Christ- given principally through the spirit of prophecy and revelation-lead them forward, like a compass, toward their goal of exaltation and eternal life.
Just as the Liahona pointed the Nephites toward the promised land, so can the words of Christ “lead the man of Christ in a strait and narrow course across that everlasting gulf of misery which is prepared to engulf the wicked- and land their souls, yea, their immortal souls, at the right hand of God in the kingdom of heaven, to sit down with Abraham, and Isaac, and with Jacob, and with all our holy fathers, to go no more out” (Helaman 3:29-30).