Compression Test:
objective of test is to test the compression in each piston...it is very limited b/c it doesn't figure in several variables

Leak Down Test:
the leak down test forces air via a compressor through the sparkplug hole...this test allows you to crank the engine slowly and watch the gauge through its whole motions...once you find a leakage area you can then just look and listen for where the problem is

http://type2.com/library/engineg/leaktst.htm

http://www.xs11.com/tips/misc/misc3.shtml