[proofplan]
We compare the usual definition of $\kappa$-saturation, which realizes complete types over parameter sets of size $<\kappa$, with the apparently stronger condition that all finitely satisfiable partial types over such parameter sets are realized. In the forward direction, compactness turns finite satisfiability of a partial type into consistency with the complete parameter theory of $M$, and then a completion of the partial type is realized by saturation. In the reverse direction, every complete type consistent with the parameter theory is finitely satisfiable in $M$, so the assumed partial-type condition realizes it.
[/proofplan]
[step:Fix the parameter language and the meaning of finite satisfiability]
Let $A \subset M$ satisfy $|A| < \kappa$. Define $L(A)$ to be the language obtained from $L$ by adding a constant symbol $c_b$ for each element $b \in A$. Let $M_A$ denote the $L(A)$-structure whose underlying $L$-structure is $M$ and in which $c_b^{M_A} = b$ for every $b \in A$.
For a finite tuple of variables $x = (x_1,\dots,x_n)$, a partial $L(A)$-type $\Sigma(x)$ is finitely satisfiable in $M$ precisely when, for every finite subset $\Delta(x) \subset \Sigma(x)$, there exists $a_\Delta \in M^n$ such that
\begin{align*}
M_A \models \bigwedge_{\varphi \in \Delta} \varphi(a_\Delta).
\end{align*}
A tuple $a \in M^n$ realizes $\Sigma(x)$ in $M$ precisely when
\begin{align*}
M_A \models \varphi(a)
\end{align*}
for every $\varphi(x) \in \Sigma(x)$.
[/step]
[step:Use compactness to complete a finitely satisfiable partial type]
Assume that $M$ is $\kappa$-saturated in the usual sense: for every $A \subset M$ with $|A| < \kappa$, every complete $L(A)$-type in finitely many variables consistent with $\operatorname{Th}(M_A)$ is realized in $M$.
Let $\Sigma(x)$ be a partial $L(A)$-type finitely satisfiable in $M$. We claim that
\begin{align*}
\operatorname{Th}(M_A) \cup \Sigma(x)
\end{align*}
is consistent.
Indeed, let $\Gamma$ be a finite subset of $\operatorname{Th}(M_A) \cup \Sigma(x)$. Write $\Gamma_T := \Gamma \cap \operatorname{Th}(M_A)$ and $\Gamma_\Sigma := \Gamma \cap \Sigma(x)$. Since $\Sigma(x)$ is finitely satisfiable in $M$, choose $a \in M^n$ such that
\begin{align*}
M_A \models \bigwedge_{\varphi \in \Gamma_\Sigma} \varphi(a).
\end{align*}
Every sentence in $\Gamma_T$ holds in $M_A$ by definition of $\operatorname{Th}(M_A)$. Hence $M_A$, with the tuple $a$ assigned to $x$, satisfies every formula in $\Gamma$. Therefore every finite subset of $\operatorname{Th}(M_A) \cup \Sigma(x)$ is satisfiable. By the first-order [compactness theorem](/theorems/2748) (citing a result not yet in the wiki: [Compactness Theorem for First-Order Logic](/theorems/4290)), $\operatorname{Th}(M_A) \cup \Sigma(x)$ is consistent.
By the type extension lemma obtained from Lindenbaum's construction for complete theories, extend $\Sigma(x)$ to a complete $L(A)$-type $p(x)$ such that
\begin{align*}
\Sigma(x) \subset p(x)
\end{align*}
and $p(x)$ is consistent with $\operatorname{Th}(M_A)$.
[guided]
We want to use $\kappa$-saturation, but the definition of saturation applies to complete types, while $\Sigma(x)$ may be only partial. The first task is therefore to show that $\Sigma(x)$ is compatible with the full parameter theory of $M$.
Consider the set of formulas and sentences
\begin{align*}
\operatorname{Th}(M_A) \cup \Sigma(x).
\end{align*}
To prove consistency by compactness, we verify finite satisfiability. Let $\Gamma$ be a finite subset of this union. Split it into the part coming from the theory and the part coming from the partial type:
\begin{align*}
\Gamma_T &:= \Gamma \cap \operatorname{Th}(M_A),\\
\Gamma_\Sigma &:= \Gamma \cap \Sigma(x).
\end{align*}
The set $\Gamma_\Sigma$ is finite, so finite satisfiability of $\Sigma(x)$ in $M$ gives a tuple $a \in M^n$ such that
\begin{align*}
M_A \models \bigwedge_{\varphi \in \Gamma_\Sigma} \varphi(a).
\end{align*}
On the other hand, every sentence in $\Gamma_T$ is true in $M_A$ by the definition of $\operatorname{Th}(M_A)$. Thus the same structure $M_A$, together with the assignment $x \mapsto a$, satisfies all members of $\Gamma$.
Since every finite subset of $\operatorname{Th}(M_A) \cup \Sigma(x)$ is satisfiable, the first-order compactness theorem (citing a result not yet in the wiki: Compactness Theorem for First-Order Logic) implies that
\begin{align*}
\operatorname{Th}(M_A) \cup \Sigma(x)
\end{align*}
is consistent. This is exactly the bridge from finite satisfiability to type-theoretic consistency.
Now we still need a complete type, because saturation is stated for complete types. Using the standard Lindenbaum extension argument for first-order theories, extend the consistent partial type $\Sigma(x)$ to a complete $L(A)$-type $p(x)$ with
\begin{align*}
\Sigma(x) \subset p(x),
\end{align*}
while preserving consistency with $\operatorname{Th}(M_A)$.
[/guided]
[/step]
[step:Apply saturation to realize the completion]
Since $|A| < \kappa$ and $p(x)$ is a complete $L(A)$-type consistent with $\operatorname{Th}(M_A)$, $\kappa$-saturation of $M$ gives a tuple $a \in M^n$ such that
\begin{align*}
M_A \models \psi(a)
\end{align*}
for every $\psi(x) \in p(x)$. Since $\Sigma(x) \subset p(x)$, the same tuple satisfies
\begin{align*}
M_A \models \varphi(a)
\end{align*}
for every $\varphi(x) \in \Sigma(x)$. Hence every finitely satisfiable partial type over every parameter set $A \subset M$ of size $<\kappa$ is realized in $M$.
[/step]
[step:Show that a complete type consistent with the parameter theory is finitely satisfiable in $M$]
Conversely, assume the partial-type condition in the statement. Let $A \subset M$ satisfy $|A| < \kappa$, let $x = (x_1,\dots,x_n)$ be a finite tuple of variables with $n \geq 1$, and let $p(x)$ be a complete $L(A)$-type consistent with $\operatorname{Th}(M_A)$.
We prove that $p(x)$ is finitely satisfiable in $M$. Let $\Delta(x) \subset p(x)$ be finite, and define the $L(A)$-formula
\begin{align*}
\theta_\Delta(x) := \bigwedge_{\varphi \in \Delta} \varphi(x).
\end{align*}
Since $p(x)$ is consistent with $\operatorname{Th}(M_A)$, the set
\begin{align*}
\operatorname{Th}(M_A) \cup \{\theta_\Delta(x)\}
\end{align*}
is satisfiable. Therefore the $L(A)$-sentence
\begin{align*}
\exists x_1 \cdots \exists x_n\, \theta_\Delta(x)
\end{align*}
is consistent with $\operatorname{Th}(M_A)$. Because $\operatorname{Th}(M_A)$ is the complete theory of $M_A$, this sentence must belong to $\operatorname{Th}(M_A)$, and hence
\begin{align*}
M_A \models \exists x_1 \cdots \exists x_n\, \theta_\Delta(x).
\end{align*}
Thus there exists $a_\Delta \in M^n$ such that
\begin{align*}
M_A \models \bigwedge_{\varphi \in \Delta} \varphi(a_\Delta).
\end{align*}
Since $\Delta$ was arbitrary, $p(x)$ is finitely satisfiable in $M$.
[/step]
[step:Realize complete types and conclude saturation]
By the assumed partial-type condition, the finitely satisfiable partial type $p(x)$ is realized in $M$. That is, there exists $a \in M^n$ such that
\begin{align*}
M_A \models \varphi(a)
\end{align*}
for every $\varphi(x) \in p(x)$.
Therefore every complete $L(A)$-type over every parameter set $A \subset M$ with $|A| < \kappa$ that is consistent with $\operatorname{Th}(M_A)$ is realized in $M$. This is precisely the usual definition of $\kappa$-saturation. Hence $M$ is $\kappa$-saturated, completing the proof of the equivalence.
[/step]