Well if you are an IE 8 regular user you will probably notice for some website’s there is a small paper kind icon on the most right of the address bar. That’s the IE 8 Compatibility View Mode.
If you hover over it, it will tells you basically to use this if you are experience any problem with the layout and this will switch to an older version of the IE and it may look better.
Does it really make the website looks better, well personally I feel IE 8 is less restrict than IE 7 and share more similar style with FireFox. Often when I use the compatibility mode I will end up the other way around. The webpage will looks awful under compatibility mode, and looks great without it.
So does this IE 8 Compatibility mode is equal to IE 7?
In short, NO. IE 8’s Compatibility View Mode is not exactly the same as IE 7. Though, most of the time it will use the IE 7 way to render HTML page, however there are some fundamental differences.
If you are a web developer and have been testing IE 7 version of your website through IE 8’s compatibility mode, you better off start reading this post from msdn blog post. You will notice that there are difference in Extending the Event Object, Attribute Ordering, Version Detection etc.
This blog post also talks more on the topic regarding IE 7 emulation through IE 8 compatibility mode
So the bottom line is, if you are an Web developer, DO NOT use IE 8 Compatibility View Mode as IE 7. Get a VM and test it under there is your best bet.