The system calculates the position of the receiver by Triangulation method, which is similar to manner in which a seismologist locates position of an earthquake epicentre using arrival time of seismic waves. When distance from one satellite is measured, the position gives us radius of a sphere. Similar measurement from another satellite gives another sphere intersecting the first in an overlapping region of a circle. The third measurement gives another sphere intersecting the circle at two points.
Now one of the two points can be eliminated by either a fourth measurement, or due to unreasonable location or speed. Thus we have an accurate position of the GPS receiver. This position can be determined by just two measurements at sea level due to a well defined datum, and software assisted elimination of unreasonable datum.
Now with known speed of signal and extremely accurate time keeping, the distance from the satellites can be calculated accurately. With more than four satellites normally visible at any given time, position calculated becomes more accurate with each additional satellite.
Satellite Configuration Geometry causes the position information to be suspect due to position of satellites themselves, if they are bunched together the position accuracy will suffer negatively and if they are more or less well spread out in space, the accuracy is much better. This aspect is called Dilution of Position (DOP).
GPS Signa ...