A GPS trace or tracklog is simply a record of position over time. It shows where you traveled while you were recording the trace. This information is gathered using a GPS receiver that calculates your position and stores it every so many seconds, depending on how you have configured your receiver.
If you record a trace while you're walking along a path, what you get is a trace that shows you where that path is in the world. Plot these points on a graph, and you have the start of a map. Walk along any adjoining paths and plot these on the same graph, and you have something you can use to navigate. If many people generate overlapping traces, eventually you have a fully mapped area. This is the general principle of crowdsourcing geographic data. You can see the result of many combined traces in the following image. This is the junction of the M4 and M25 motorways, to the west of London. The motorways themselves and the slip roads joining them are clearly visible.