A compound is a substance formed when two or more elements chemically combine together in a definite proportion. A compound is physically and chemically very different from the elements it is formed from. Water, which is formed from hydrogen and oxygen, has different properties than the individual elements. Physically water is liquid at room temperature but hydrogen and oxygen are gases. Water is useful to control the fire whereas oxygen helps in burning and hydrogen is highly explosive gas.
A molecule is formed when atoms are held together by covalent bond. Number of such molecules comes close to each other and forms a compound. Hence, molecules can be defined as smallest unit of many compounds.