Satellites for navigation were developed in the late 1950's as a direct result of ships needing to know exactly where they were at any given time. In the middle of the ocean or out of sight of land, you can't find out your position accurately just by looking out the window.
The idea of using satellites for navigation began with the launch of Sputnik 1 on October 4, 1957. Scientists at Johns Hopkins University's Applied Physics Laboratory monitored that satellite. They noticed that when the transmitted radio frequency was plotted on a graph, a pattern developed. This pattern was recognizable to scientists, and it is known as the doppler effect. The doppler effect is an apparent change of radio frequency as something that emits a signal in the form of waves passes by. Since the satellite was emitting a signal, scientists were able to show that the doppler curve described the orbit of the satellite.
Today, most navigation systems use time and distance to determine location. Early on, scientists recognized the principle that, given the velocity and the time required for a radio signal to be transmitted between two points, the distance between the two points can be computed. The calculation must be done precisely, and the clocks in the satellite and in the ground-based receiver must be telling exactly the same time - they must be synchronized. If they are, the time it takes for a signal to travel can be measured and then multiplied by the exact speed of light to obtain the distance between the two positions.
The Navstar satellites are examples of satellites that use this principle. Click here to find out more about them.