GPS is short for Global Positioning System and is a electronic device that can determine your approximate coordinate location (within around 6-20 feet) on the planet. Coordinates are typically given in Longitude and Latitude (which is a system I despise. UTM is better. MGRS is best). You can use the unit to find your way from your current location to another location. My GPS and most others have screens that can give you information like, speed, elevation, distance, direction, map info with streets and topography.
In a nutshell, a GPS works by recieving radio signals from atleast three sattelites orbiting the Earth. The sattelites know thier locations in orbit because of radio signals from ground based stations, the sattelites send radio signals to GPS units in return. The GPS calculates how far away it is from the sattelite by timing how long it takes for the signal to reach you. These calculations give you a location on the surface of the earth in relation to where the sattelites are in space. It takes atleast four sattelites to give you your elevation.