I'm no expert but I think you're talking about the alert feature that lets you know you are getting close to your selected waypoint. As I recall that distance can be chosen - ie 175 feet, etc..
I seldom use my gps (garmin gpsmap 62s) so I'm very rusty as far as how it works, but I believe it generally gets to within 20-30 feet of the selected waypoint. Sometimes even closer.
I believe Garmin's newest model (gpsmap 66st - or something along those lines) will typically get within 10-15 feet of the selected waypoint. It uses multiple satellite systems (as opposed to mine which uses only the US system) so it is supposedly far more accurate. Whether that is true, or not, I cannot say - I haven't used one.
My understanding is that coordinates from a source such as google earth are not going to exactly match up with the actual coordinates, so if your waypoint was selected on the basis of something like google earth there is (apparently anyway) a discrepancy. Another factor is the (for lack of a more accurate term) unit of measurement - for example Google Earth might be set to one unit and your gps might be set to another unit. Both can be changed and I suspect accuracy will be far better if the two are using the same unit of measurement.