This option instructs the linker to generate code for an MSP430 with at most 64 kilobytes of code memory (a compact model). Some of the code transformations performed by the linker are code-model-dependent, in particular whether CALL or CALLA should be used for procedure abstraction and how the stack is modified.

For some processors, such as the CC430, although they have an MSP430X core, they do not have code memory that extends beyond the first 64 kilobytes of the address space. In this case, it is beneficial, in terms of code space, data space, and execution time, to use the compact memory model which limits the total address space to 64 kilobytes.