GPS altitude references the geodetic altitude which is a mathematical model of the equipotential surface of the Earth gravity field that most closely approximates the mean sea level. As this changes from around -106m to +85m around the world, your GPS could tell you you're below sea leavel even when standing on the sea shore. GPS altitude errors also tends to be in the order of 1.5x the horizontal errors, due to satellite geometry. Assuming a horizontal accuracy of 75', this leads to an altitude error of 112'. So in theory you GPS altitude could be in error by 685'.
Using differential GPS (WAAS etc) you can virtually eliminate these errors, and could use GPS altitudes for vertical navigation, on say a precision approach (virtual ILS). IFR approved units tend to also have a barometric altimeter built into the GPS.
EA