The International 2014

Someone please clarify this for me as I don't play Dota2. You buy a compendium and the money you pay is put into the prize pool for the international. As a reward you get the equivalent of cash items in MS and as the prize pool breaks more stretch goals anyone that bought a compendium recieves the same rewards regardless of how many they bought?

These rewards are cash items only and are not related to regular game updates at all?

The compendium is essentially a goodie-bag you buy and get a ton of pomegranate in return, for most players the money added to the prizepool is secondary.
It comes with a lot of features like a fantasy league, voting for favourite players and players to be featured in an all-star match and so on. Along with a lot of other prediction stuff that is just fun to do for the people into the competitive scene. After buying a compendium you can use money to buy points to level up faster(Leveling up your compendium that is, you can also level up your compendium by just playing the game) and get more cosmetic stuff unlocked like until shortly after the tournament some of your ingame effects change colours and stuff or unlocked different versions of the cosmetics you have unlocked for compendium owners and so on.

So far stuff that the compendium has unlocked for players:

 Spoiler

-Battle point booster, increases how fast you level up, each level rewards you with a random cosmetic item and every 5 level rewards you a rare cosmetic item.
-Loading screens for while the game is loading
-Players get to vote which hero gets the next super super well made cosmetic set
-New ingame HUD
-New game mode
-Cosmetics for all compendium owners
-Chat emoticons
-New courier(unique ingame character)
-More music for the game
-Another new game mode
-More environmental effects for the game
-Customization of your base
-New hero

Some of these things like certain cosmetics are unique to the compendium owners. But a lot of them are things that all of the community will benefit from
Stuff like the game modes are obviously permanent stuff and not only for the compendium owners and will affect gameplay because well, it's an entirely new game mode.
And all rewards are retro-active for people that buy compendiums later.

Does that answer your question? Dota2 is 100% free to play, there's nothing you can buy to give yourself any kind of advantage ingame.

Long story short: valve is selling hats and are really good at it and we breached a 7 million dollars prize pool. The compendium is basically all of valve's philosophy in one item: