GPS (Global Positioning System) is a global, satellite-based system for determining precise location on Earth.
When used with compatible phone apps and services, and with the user's permission, it can also transmit location information to those apps and services. This is called LBS. For example, a location-enabled map can show you exactly where you are at the moment, where the nearest Thai restaurant is, and how to get there, all without requiring manual entry of your current location.
In a phone, this will also allow operators to immediately receive your location when you call the emergency number (911 or 112).
Most phones with "GPS" in fact use A-GPS technology. The "A" stands for assisted, and means that the phone relies on the network for help in determining location quickly and accurately. Although the phone does receive GPS signals directly from the satellites, it can't determine actual location quickly nor accurately without help from the cell network.
There are several other global positioning satellite networks, including the European Galileo and Russian GLONASS. They work similarly to GPS, but are separate. Phones and other devices can use multiple networks simultaneously to improve location accuracy and speed.