The geoid is the equipotential surface of Earth's gravity field that coincides, on average, with global mean sea level extended under the continents. Because mass is distributed unevenly inside the planet, the geoid is a lumpy, irregular surface — not a smooth ellipsoid.
What it is and why it matters
Heights in geospatial work are measured against one of two references. An ellipsoid (such as WGS84) is a smooth mathematical model used by GNSS receivers, while the geoid is the gravity-defined surface that "up" and "down" actually follow. The difference between them at a point is the geoid undulation (N), which ranges roughly from −106 m near India to +85 m near Iceland.
The relationship is:
H = h − N
where H is the orthometric height (height above the geoid, i.e. "height above sea level"), h is the ellipsoidal height from GNSS, and N is the geoid undulation.
This matters because most surveying, hydrology, and engineering work needs orthometric heights — water flows according to the gravity field, not the ellipsoid. A DEM tagged with the wrong vertical reference can be off by tens of metres.
Concrete example
A GPS receiver reports an ellipsoidal height of 152.4 m for a benchmark. Using a geoid model such as EGM2008 or a national model (e.g. GEOID18 in the conterminous US, paired with NAVD88), you look up N = −28.6 m at that location. The orthometric height is therefore 152.4 − (−28.6) = 181.0 m above sea level.
Common pitfall
Confusing the geoid with the ellipsoid. GNSS gives ellipsoidal heights by default; treating them as elevations above sea level introduces a systematic error equal to the local undulation. Always record which vertical datum and geoid model a dataset uses.