VMG: Velocity Made Good
A good way to understand Velocity Made Good (VMG) is to imagine a power boat and a Formula sailor traveling from a leeward (downwind) mark to a windward (upwind) mark together. The powerboat travels along a straight line between the marks while the sailor tacks back and forth to get upwind.
Now imagine that the driver of the powerboat controls the powerboat's speed to keep the windsurfer directly off the side of the powerboat and not ahead of or behind it. The speed that the powerboat must travel to keep even with the windsurfer is the windsurfer's VMG.
As shown in the diagram, the actual speed of the windsurfer can be broken up into two perpendicular components: useful speed (VMG) and wasted speed that does not help the windsurfer get upwind.
All this also applies to a windsurfer jibing back and forth to get downwind. In this case VMG represents how fast the windsurfer is getting downwind.
Optimizing VMG is far more important than just going fast. In an upwind/downwind race VMG is the 'bottom line'. Plain speed is only important in the context of how it affects your VMG. For example, if you sail on a beam reach, perpendicular to the wind, you will go really fast but you won't get any closer to the windward mark and your VMG will be zero. On the other hand, if you point straight upwind you won't go anywhere, so your VMG will again be zero. Somewhere in between head-to-wind and a beam reach lies a 'magic angle' that will optimize your upwind speed and make you a champ. Unfortunately, this elusive angle depends heavily on your gear, the prevailing conditions, your size and your sailing style.
The S5 takes GPS speed readings every second to get your actual speed. The device then uses trigonometry to extract the component of your actual speed that is aligned with the upwind-downwind line defined by two reference locations you stored in the device's memory (the direction of this line corresponds to the line that the imaginary powerboat traveled along in our example). This process is repeated every second and the results are displayed on the oversized LCD screen.
This steady stream of easy to understand (big number = good) feedback allows you to precisely dial-in on the magic angle for your current setup. It also provides good insight into which gear combinations and settings work the best for you in a given set of conditions.