I have an iPad4 (no internal GPS) with the GNS1000 external GPS.

The coloured triangles indicate that the altitude readout is likely to be accurate within a certain distance. For example a blue triangle means that the position may be accurate to within 50ft, while green means within 100ft, yellow within 150ft, orange within 250ft and red for a more unreliable altitude reading. Just remember that the iPad uses GPS to find your horizontal and vertical position, and so the altitude instrument is not going to be as accurate as a real altimeter.