Okay, lots of people either don't know how latitude is calculated or have misconceptions about it. Here is the
truth:
The Latitude, like any modern geodetic parameter, is defined in relation to a reference model of the earth's surface. The standard reference surface accepted in the US and most other countries is an ellipsoid of revolution having an equatorial radius (semi-major axis) of exactly 6,378,137 meters and an eccentricity of approximately 0.081819191. Yes, if you didn't know it until now, the earth is not a perfect sphere, it's slightly oblong because it spins.
The Latitude of a point on the reference ellipsoid is defined as the acute angle between the surface-normal at the point in question and the projection of this normal upon the equatorial plane (normal=perpendicular). What this means is, imagine a line pointing from the surface of the earth directly up (with reference to that spot). The angle that the line makes with a line going straight out from the equator is the degree latitude.
Longitude is a lot easier since the earth does look like a perfect sphere when viewed from the north or south pole. It's done exactly how you would imagine: divide the earth into 360 wedges and each one represents one degree of longitude.
Now you know...go impress your friends.
**Physicists Note: The earth isn't really elliptical either. Because the south pole has the land mass of Antarctica and the north pole is pretty much just water, the earth is really pear-shaped. This is a very slight difference though, and because of how much harder the math would be using a pear-shaped model instead of an ellipsoid, pretty much everyone uses the rotating ellipsoid model.