The equipment, and hence the aircraft, knows where it is at all times. It knows this because it knows where it isn't. By subtracting where it is from where it isn't ( or where it isn't from where it is, depending on which is greater ), it obtains a difference or deviation.
Jazz, havent noticed too many people use Freud to describe the FMS logic
Actually, it doesnt really know where it is, it knows where it was, and uses this to estimate where it is, the foundation of the EKF, or Extended Kalman Filter.
