Have you ever watched an almost-finished road construction projects where one of those machines comes through and spits a small blob of pain every second to mark where the fog lines, center lines, etc. will go?
Now imagine your GPS does that. And imagine the electronics inside the GPS tries to fit a straight line to the last 3-7 points (to take out random position error that's going to pop up), and puts an imaginary point on that line after every "pfft" of paint. When you go around a cul-de-sac, you may get 4 imaginary paint spots around the curve.. Pretty soon the fitted lines are going nuts, and the distance from the end of one curve fit to the end of the next curve fit gets very small. Your GPS does a simple distance/time calculation of your speed and it looks like you're going very slow. It may also artificially reduce the apparent distance you rode.
A calibrated wheel sensor fixes those problems.