If you've used Foursquare and ever seen a "Nearby Tip," then you've experienced geo-fencing.
A geo-fence is like an outline of a specific location or area that, when you are inside, allows additional messages or information to be brought to your attention. Pretty straightforward: If it isn't "nearby" then don't show it.
More advanced uses for geo-fences in location services are coming. These new features are being driven by advances in data services, software interfaces and mobile hardware.