If we take a look at the panel we see that there are two rows of icons. The first row of icons (Shape Modes) creates compound shapes while the second one (Pathfinders) creates similar results but it focuses mainly on the paths themselves rather than the produced shape itself. Let’s see what each icon is doing.
Supposing you have the following two rectangles.
If you select both and click on this button in fact you are adding the one shape to the other resulting in a shape that combines these two rectangles.
The combined result gets a yellow fill, since stacking order of the shapes is important when performing the pathfinder operations. Attributes of the top shape will be used by Illustrator for the combined result properties. By using the direct selection tool you can make adjustments of each one of the two shapes directly updating the resulting compound shape. For example, try moving the lower right rectangle further to the right as seen below.
No problem… You still have the resulting shape, while you can modify each of its components individually… Cool! If you now select your shapes and click on the Expand button on the Pathfinder Panel
you no longer have the ability to separately manipulate each individual shape and what you get is ONE FINAL shape for further actions. If you want to add the two shapes and expand to one final shape in one step, then press and hold the ALT key and click on the add button. It saves you time, as long as you are sure about the final shape.
Let’s go back to our two initial rectangles.
If you select both and click on the Subtract button, then you subtract the top most shape from what lies beneath it. So if you perform the operation you get the following result.
Like before, you can adjust the appearance of the resulting shape by editing each one of the components separately. Here, with the direct selection tool I’ve moved the subtracted shape diagonally towards the upper left corner.
Click on the expand button and you get the final ONE shape.
If we select the two rectangles again, and click on the Intersect button, we get a compound shape that is only the Intersecting area of the two rectangles. Click on the expand button and you produce a small yellow rectangle.
If we click on the exclude button, then we get the inverse result. We have a shape with an empty area. This area is the overlapping area of both rectangles. Do it and you’ll end up with the following shape.
Try experimenting, and play with the capabilities of the Pathfinder Panel to explore the vast potential in creating complex shapes ...