A vertical datum is the reference surface from which heights and depths are measured. It answers the question "elevation relative to what?"—mean sea level, a geoid model, or the ellipsoid itself.
Two families of vertical datum
Vertical datums fall into two broad types. Orthometric heights are measured from the geoid (an equipotential surface approximating mean sea level), which is what most people mean by "height above sea level." Ellipsoidal heights are measured from the reference ellipsoid and are what raw GNSS/GPS receivers output. The difference between the two at any location is the geoid height (geoid undulation), which can exceed ±30 m and varies regionally.
Why it matters
Terrain analysis, flood modelling, and engineering all depend on consistent vertical references. A DEM delivered in ellipsoidal heights and a survey in orthometric heights can disagree by tens of metres at the same point, silently corrupting cut/fill volumes, inundation extents, or drainage models. Always check the vertical datum and units before combining elevation datasets.
A concrete example
In the United States, NAVD88 (orthometric) has long been the standard vertical datum, while GPS reports ellipsoidal heights on NAD83/WGS84. Converting between them requires a geoid model such as GEOID18. To go from a GPS ellipsoidal height to a NAVD88-style orthometric height: H (orthometric) ≈ h (ellipsoidal) − N (geoid undulation). EPSG codes also identify vertical datums—for example EPSG:5703 for NAVD88 height.
Common pitfall
A horizontal datum and a vertical datum are independent. A dataset can be horizontally referenced to WGS84 yet vertically referenced to a local tidal or orthometric datum. Assuming the vertical reference matches the horizontal one—or that all DEMs are "above sea level"—leads to systematic elevation errors.