kernel patches are for the source tree. use the "patch" command to apply it to the kernel source. and yes, you have to recompile anytime you apply a patch ( for kernels, apps, etc...)
cd <some source directory> ( we'll assume the patch is uncompressed and in the source directory)
patch -Np1 -i < patch name >
the number after -Np does make a difference, most of the time it's either a 0 or a 1. if one fails ( if it ask you what file to patch, it failed), change the number.