Basically, GPS will provide you with a 3D fix, with may or may not be on Earth. Imagine this: You have multiple magic footballs (the soccer ones, for all you americans!), that can join into each other.
Take one, and there is an infinite number of points all along the surface, all equidistant from the center of the ball.
Place ball number two in such a manner that the two balls intersect. The intersection will be a circle, right? You still have an infinite number of points, though.
Now, ball number three goes anywhere it will cross the circle earlier mentioned. It will cross at two points. One probably being in space, and one on Earth. We have narrowed it down to two possible positions.
Now, place ball number four in such a manner that it will intersect either of the two points. You have your position.
Now, this far, we havn't included the Earth. It may or may not be at the point where all our four balls intersect. If it is, you are on the surface. If not, you are in the air somewhere. Let's remember that the GPS reciever only knows only the position of the different satelites
in relation to Earth and it's own charts, and will calculate it's own position based on this. It knows where it is, it knows where the Earth is, and the rest basically comes down to trigonometry
