The Hot Idle Compensator is used on some carburetors to offset enriching effects caused by percolation during hot operation. Generally used on vehicles with air conditioning. When the engine is running hot and then stopped, the fuel can boil or percolate and vaporize causing a rich condition at idle.
The compensator is mounted on top of the venturi, or behind the float bowl and at a extreme hot temperatures, the bi-metal thermostat bends and opens a passage that leads from the venturi to below the throttle valves. This adds just enough air to the fuel mixture to lean out the fuel giving you a smoother idle.
Be sure the compensator is closed when adjusting the idle mixture, otherwise you may be getting too much air introduced.