American state embodies this compiler's spirit (9)
I believe the answer is:
animation
'spirit' is the definition.
(thesaurus)
'american state embodies this compiler's' is the wordplay.
'american' becomes 'a' (common abbreviation - e.g. in organisation names).
'state' becomes 'nation' (both can mean a country).
'embodies' means one lot of letters goes inside another.
'this compiler's' becomes 'I'm' ('I'm', referring to the crossword compiler).
'nation' going around 'im' is 'nimation'.
'a'+'nimation'='ANIMATION'
(Other definitions for animation that I've seen before include "Making of cartoons" , "Art of cartoon making" , "Liveliness - illusion of movement in cartoon films" , "(State of) being full of life" , "Cartoon-making art" .)