If you've got a Wi-Fi-only iPad or iPad 2, you're generally unable to use GPS to get more accurate location pin-pointing. Unless you also happen to own an iPhone and use its Personal Hotspot feature to tether—which, it turns out, passes along GPS data.
The video above, from TabletMonsters' (literal) test drive, shows the iPhone/iPad GPS-passing in action. Blogger Zachary Bir also testified to the iPhone/iPad GPS connection. It makes sense for Maps, as well as location-based games or exploration services, as well as getting a fix in an area without Wi-Fi and still keeping your bigger, finger-friendly screen.
It's likely that this method only works between Apple products, but if you're able to pull down GPS results from an Android or other smartphone, we'd love to hear about it.
Video: Wi-Fi Only iPad 2 GPS Navigation [TabletMonsters.com via Daring Fireball]