Right, SK-7 is the best compass that I've seen and used. It works correctly even when it is tilted a lot. Many other compasses just stick when you tilt them a teeny bit.
Dip balancing: The earth's magnetic fields are usually not parallel to the earth's surface. Depending on the locale, it either points downwards into the ground, or points upwards towards the sky, at a slight angle. The extreme case would be at the magnetic poles. North magnetic pole : the fields go straight up into the sky, South magnetic pole : fields go straight into the ground.
Since the magnetic field exerts a force to the compass needle in the direction of making it parallel to the field direction, if you set the compass completely level, the needle will usually be at an angle to the level plane. Since this is undesirable (when we talk about NSEW it is a 2D thing, and also the needle can stick if it's not level) the needle is balanced such that when it is pointing north, the weight balances out such that the needle is on the level plane. For example, if the magnetic field points into the ground slightly from north to south, a non-balanced needle will have its N side slightly tilted up. In order to balance this, the N side of the balance will be made to be a little heavier so that the needle ends up being closer to being level when it pointing in the right direction.