License compatibility is a legal framework that allows for pieces of software with different software licenses to be distributed together. The framework arises because the respective licenses can contain contradictory requirements, rendering it impossible to legally combine source code from separately licensed software in order to create a new program.
License compatibility can be defined differently around the concepts of "collective/combined/aggregated work" and "derivative work". The first "collective work" license compatibility definition allows the usage of various licensed works in a combined context:
the characteristic of two (or more) licenses according to which the codes distributed under these licenses may be put together in order to create a bigger distributable software. [emphasis added]
A stronger definition includes the capability to change the license. As most prominent example, the copyleft licenses demand that the "derived work" combined from code under various licenses as whole is applied to the copyleft license.
License compatibility: The characteristic of a license according to which the code distributed under this license may be integrated into a bigger software that will be distributed under another license. [emphasis added]
A combined work consists of multiple differently-licensed parts (avoiding relicensing). To achieve a combined work including copyleft licensed components (which have a viral property leading potentially to a derived work), proper isolation/separation needs to be applied.
With individually licensed source code files multiple non-reciprocal licenses (as permissive licenses or own proprietary code) can be separated, while the combined compiled program could be re-licensed (but is not required). Such source code file separation is too weak for copyleft/reciprocal licenses (as the GPL), as they require then the complete work to be re-licensed under the reciprocal license as derivative.
A slightly stronger approach is a separation on the linking stage with binary object code (static linking) with all the components living in the resulting program in the same process and address space. This satisfies "weak copyleft/standard reciprocal" combined works (as LGPL licensed ones), but not "strong copyleft/strong reciprocal" combined works. While commonly accepted that linking (static and even dynamic linking) constitutes a derivative of a strong copyleft'd work, there are individual alternative interpretations.