This thread is as a result of a post in December 2012, in another thread ( https://discussions.apple.com/message/20450908#20450908 ) by jacdan. I felt it would be preferable if this discussion was kept separate from the original post.
Until now, iTunes regarded a Compilation Album as one with multiple artists, but the music industry and consequently a lot of the entries on Gracenote regarded an album by a single artist - but with songs from various stages of their career - as a compilation. Looking at the Artist list in iTunes, there was no entry for "Various Artists", and albums were instead listed under "Compilations". This has meant for example, that not only was "Now XX listed under Compilations, but so too was "The Whole Story" by Kate Bush (a compilation of her earlier work). If that was the only album of hers in my Library, her name would not be listed in the Artists section. I also found it necessary to fill in the Album Artist field on Compilation albums with "Various Artist".
With iTunes 11, in the Artists section of the Library, Compilation Albums (by various artists) are now listed under Various Artists. I discovered several albums in my Library that did not have "Various Artists" in the album name field and these were listed under "Compilations" instead. Completeing the Album Artist field has sucessfuly moved those albums to Various Artists. The "Compilations" within the Artists section has now disappeared.
However, what is not quite clear, is when or how albums do get put into the Compilation section. I have experimented with the Kate Bush album, and a Mike & The Mechanics album, to see if I could get them to be entered into the "Compilations" section, but without success.
So perhaps this is actually a fix in iTunes 11. It just remains tro sort out why I cannot get Kate's "The Whole Story" into the Compilations section.