DGPS stands for Differential GPS. The GPS signals received from the GPS satellites have an accuracy of about 10 m horizontally and 15 m vertically. A greater accuracy of location may be required for some applications such as GPS navigation. This can be achieved by making use of differential GPS. AS the name suggests, one major component of differential GPS is a reference station (also called base station) that has known location parameters. The reference station in turn communicates the error (or the correction factor) to be applied to the computed values of the location/speed/time.
The base station should be close enough to take care of any ionospheric delay in signal propagation from base station to the GPS unit. The base station is usually closer than 30 kms from the GPS unit. By positioning base stations appropriatelyl, an accuracy of few meters (typically less than 10 meters) could be achieved (with respect to the true location of a gps receiver). The Local Area Augmentation System (LAAS) and Wide Area Augmentation System (WAAS) rely on DGPS for accurate measurements. LAAS and WAAS are designed to reliably support aircraft precision approach and landing. GPS receivers designed to make use of LAAS and WAAS can provide location information typically within 3 meters.
Ref.: http://www.colorado.edu/geography/gcraft/notes/gps/gps.html
