The main point here is to make a distinction between infinity and the point at infinity. What is relevant in your case is the point AT infinity, which is DEFINED to be the point corresponding to z=0 (the origin) under the transformation 1/z. This means that an EXTENDED complex plane is now defined which includes this point at infinity.
This is nothing mysterious, just a convenience which makes sense and allows mathematicians to say that under the transformation 1/z circles are transformed to circles, where the definition of circle is now extended to in clude straight lines.
Any circle in the complex plane which passes through the origin (z=0) is transformed by 1/z into a line, and all other circles are transformed to circles.
Compactification is most easily understood in terms of the projection of the complex plane onto a sphere by stereographic projection:
The complex plane WITHOUT the point at infinity transforms to a sphere (usually called the Riemann sphere) with the north pole point missing. In the case of the EXTENDED complex plane then this north pole point corresponds to the point at infinity of the extended complex plane and so the Riemann sphere now has no holes in it and so is compact.
I know this doesn't answer your question yet but it may help to clarify your question. Can you perhaps ask your prof. to clarify his question and then we can come up with an answer.