If you have roughly 30 minutes to kill a YouTube poster named Drift0r put together a couple of videos which break down lag comp and how to improve your experience with it. It's review for some people, but if you're looking for a good starting point it's one of the better ones I've seen.
Black Ops 2 In Depth - Lag Compensation Explained! - YouTube
Black Ops 2 In Depth - How To Improve Lag Compensation - YouTube
If watching YouTube videos isn't your cup of tea one of the frequent contributors here in the forums, Ghamorra, wrote up a pretty succinct explanation as well (link below).
Re: Lag Compensation Explained (Wall of Text)
If I wanted to give someone the quick and dirty Cliffnotes version I would say verify your NAT type is open and hardwire into your network if possible. Setting a QoS policy to throttle your bandwidth will not guarantee better results, even though I've seen postings in these forums which state otherwise.
Hope this gives you a good starting point.