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In chip music's ‘80s heyday, the term hadn't yet been coined - it was just "computer game music", "SID music", and so on. Around the turn of the ‘90s, Commodore Amiga musicians made tunes that imitated the already-quaint sound of 8-bit machines, the sound chips of which were basically crude synths, unlike the Amiga's Paula chip, which was designed to play back samples from the computer's memory.
Such songs were called "chiptunes" to differentiate them from regular Amiga music. The term was eventually applied to music from the original 8-bit machines too, and the modern definition is even broader and basically covers anything that shares the bleep-bloop aesthetic of ‘80s videogame music, regardless of the technology used to create it.
Related to the demoscene (on which more imminently), compos are simply competitions to see who can write the best tune. Often there are restrictions on individual compos; for example, all entrants must use a supplied set of samples to create their song.