That air gauge also displays the decreasing level of air pressure in the air tank as you use the compressed air.
The other compressor air gauge displays the pressure setting of the air regulator. This setting is created by the compressor operator adjusting the regulator setting with the regulator know. Doing so changes the air pressure level that the downstream application will receive after the compressed air from the tank passes through the regulator.
A great deal more information is available about compressor air gauges if you care to watch the following video.
The operation of the air gauge will not be affected regardless of the mounting position. The two configurations are available to allow the user to pick the one that best suits their application.
For the typical homw or small workshop air compressor, gauges will offer a pressure range from zero up to around 200 PSI.
Don't worry if yours doesn't show that pressure range. The air gauge pressure range on your compressor has been selected to indicate the pressure range that your compressor will require.
Over time, the needle may break, the needle shaft might fail, the plastic cover may get broken, or more likely, very humid air has, over often a short while, corroded the gauge internals to the point that the gauge doesn't display pressure accurately anymore.
If the tank gauge fails, you won't be able to see the cut out or cut in pressure levels as air is built and consumed, and you want to know this in the event that the pressure switch fails and a replacement becomes necessary.
When shopping for a new air gauge, it is helpful to take the old one with you. That will ensure that you match the mounting thread and acquire a gauge with the same, or similar, pressure range as the old.
Air gauges shouldn't set you back more than $10-$15 for a general purpose type. If you select a stainless steel gauge, or one with different characteristics, it might be more. For the home compressor and small workshop compressor user, I recommend you stick with the basic unit.