A geofence is a virtual fence or perimeter around a physical location. Like a real fence, it creates a separation between that location and the area around it. Unlike a real fence it can also detect movement inside the fenced area.
It can be any size or shape, even a straight line between two points.
Geofences are created using mapping software, which allow the user to draw the geofence over the desired area. It is made up of a collection of coordinates (latitude and longitude) or in the case of a circular geofence one point that forms the center.
Geofences can be used to keep things in (know if a vehicle or piece of equipment is removed from your yard) or to keep things out (a restricted area that vehicles need to avoid, such as a mining company keeping workers out of an area where explosives are being used).