This custom is frequently seen in both Japan and Korea.
With the 日 of 日本, the 日 means Japan. Then, you add Korea into the mix and you have Japan + Korea. This word means Japan and South Korea or South Korea and Japan (depending on where you're from, I guess).
This is a jukugo word, which usually means on'yomi readings from the kanji. If you know the readings of your kanji you'll know how to read this as well.