Google Maps v2.01

If you have a GPS-enabled device, this blue dot corresponds to your GPS location. At times, or if you do not have a GPS-enabled phone, you might see the blue dot surrounded by a light blue circle (as shown on the right) to indicate uncertainty about your location.

Why the uncertainty? The My Location feature takes information broadcast from mobile towers near you to approximate your current location on the map - it's not GPS, but it comes pretty close (approximately 1000m close, on average). We're still in beta, but we're excited to launch this feature and are constantly working to improve our coverage and accuracy.