Compacting should be explained in simple terms to all students. Among the points you should touch upon are pretests, the fact that some students may already know the material being tested, and that exciting learning activities exist for students who have already mastered the material.
You should also spell out, in advance, the rules regarding behavior while students are doing alternative work. Two such rules may include working as quietly as possible, and not interrupting the teacher while he or she instructs the rest of the class.