The Dungeon Locator is an item which resembles a Compass in vanilla Minecraft, but with a yellow needle instead of red.
It is obtainable only in Creative Mode or using cheats (/give command or JEI).
It is useful for pointing the way to dungeons.
With the item in either hand, move (or fly) around while watching it - head in the direction it points, and you should find a dungeon entrance soon enough. ( If you are currently directly above a dungeon entrance, it might point in some strange direction.)
Unlike a vanilla compass, the Dungeon Locator will not show anything useful if it is thrown on the ground or placed in an Item Frame. It will also not show anything useful on the Overworld, or in the Nether or the End or other non-Galacticraft dimensions.