A geofence is a virtual perimeter. When a tracked item crosses it, the system does something — logs an event, sends an alert, starts a workflow. The classic implementation uses GPS coordinates and a circle or polygon drawn on a map, which works well for vehicles and outdoor equipment.
Indoor geofencing
GPS is unreliable indoors, so indoor "geofences" are usually built from reader coverage instead: a fixed RFID reader or portal at each doorway defines the boundary, and crossing it is detected when the tag is read. The result is the same idea — a boundary that triggers an action — without needing batteries on the assets.
Why it matters
Geofencing moves you from after-the-fact discovery ("it's gone") to real-time awareness ("it's leaving").
Designing useful boundaries
Draw boundaries around places where crossing them means something — a site perimeter, a secure store, a department — and decide in advance who is notified and what they should do. A boundary that fires constantly for legitimate movement will soon be ignored.