Compact optimized stellarators offer novel solutions for confining high-beta plasmas and developing magnetic confinement fusion. The three-dimensional plasma shape can be designed to enhance the magnetohydrodynamic (MHD) stability without feedback or nearby conducting structures and provide drift-orbit confinement similar to tokamaks. These configurations offer the possibility of combining the steady-state low-recirculating power, external control, and disruption resilience of previous stellarators with the low aspect ratio, high beta limit, and good confinement of advanced tokamaks. Quasi-axisymmetric equilibria have been developed for the proposed National Compact Stellarator Experiment (NCSX) with average aspect ratio 4-4.4 and average elongation similar to 1.8. Even with bootstrap-current consistent profiles, they are passively stable to the ballooning, kink, vertical, Mercier, and neoclassical-tearing modes for beta > 4%, without the need for external feedback or conducting walls. The bootstrap current generates only 1/4 of the magnetic rotational transform at beta = 4% (the rest is from the coils); thus the equilibrium is much less non-linear and is more controllable than similar advanced tokamaks. The enhanced stability is a result of 'reversed' global shear, the spatial distribution of local shear, and the large fraction of externally generated transform. Transport simulations show adequate fast-ion confinement and thermal neoclassical transport similar to equivalent tokamaks. Modular coils have been designed which reproduce the physics properties, provide good flux surfaces, and allow flexible variation of the plasma shape to control the predicted MHD stability and transport properties.