SQL Server will compile an execution plan specifically for the statement that the query hint is on. There’s some benefits, like something called “constant folding.” To us, that just means that the execution plan might be better than a normal execution plan compiled for the current statement.
It also means that the statement itself won’t be vulnerable to parameter sniffing from other queries in cache. In fact, the statement with option recompile won’t be stored in cache.
Click through for a couple of demos as well as a discussion of positives and negatives regarding its use.