This directory should contain a sub-directory for each sprite map you would like to have. Also, you will need to add the sprite includes to the library/settings/sprites.sass partial.
Compass spriting has a pretty good official documentation, so I don't think I need to dive much deeper in details on how to setup everything here.
You should, however, have a good look at the library/settings/sprites.sass partial, as it contains an extended documentation on how I planed sprites for this skeleton. Basically, there is hole issue about Compass always emitting CSS when importing sprites, and that is pretty much explained and resolved in the file mentioned above.