This test tells you how well each cylinder seals. With the engine warm, put the piston at top center on the compression stroke (both valves closed), feed regulated air at 80 psi into the spark plug hole, and read the second gauge: a reading like 74/80 means a little air escapes past the seals. The manufacturer gives the lowest acceptable reading, often with a calibrated orifice to compare. Hold the propeller firmly: the air pressure can swing it.
Where the air comes out tells you what leaks:
Hissing at the exhaust pipe: the exhaust valve.
At the air intake or carburetor: the intake valve.
At the oil filler or crankcase breather: the piston rings.
Other checks
Spark plugs: their tips show how the engine runs. Light tan or gray is normal; black and sooty means too rich; wet and oily means oil getting past rings or valve guides; heavy lead deposits often mean too lean at idle or high-lead fuel.
Oil filter and analysis: cut open the filter and look for metal; send oil samples to a lab for trends in wear metals.
Borescope: look into cylinders at valves, walls and pistons without taking them off.
Magneto check during the run-up: switch to each magneto and watch the rpm drop, which should be within the manual's limit and even.
Overhauls
A top overhaul rebuilds the parts above the crankcase (cylinders, pistons, rings, valves). A major overhaul takes the whole engine apart and brings every part back within limits. The manufacturer recommends a time between overhauls (TBO). For an aircraft flown under part 91 that isn't for hire, TBO is a recommendation, not a rule; operators flying for hire may have to follow it under their approved programs.
Practice
During a differential compression test you hear air escaping from the exhaust pipe. What is leaking?
More info
Quick reference
Differential compression test
80 psi into the cylinder at top of compression; read what stays.
Air at exhaust / intake / breather
Exhaust valve / intake valve / rings.
Sooty plug
Too rich.
Oily plug
Oil past rings or valve guides.
Top overhaul
Cylinders and their parts.
TBO
Recommended time between overhauls; not mandatory under part 91 for private flying.