A compression is where the particles in the air are closer together, so where those black lines are closer together. A rarefaction is the opposite, where they're spread out.
The wavelength is the distance between two compressions or rarefactions (i.e. two peaks or troughs on a graph), therefore thats the horizontal arrows.
The amplitude is the distance from the centre of the wave to the peak or trough, so that is the vertical distance on the diagram.
