The GOPATH environment variable is used to specify directories outside of $GOROOT that contain the source for Go projects and their binaries.
See the go command and go/build package documentation for more details.
Since the $GOPATH variable can be a list, the rest of this document will use $GOPATH to mean the first element unless otherwise specified.
On OS X or Linux (bash), adding the following expression to PATH will add all $GOPATH/bin directories.
${GOPATH//://bin:}/bin
The source for a package with the import path "X/Y/Z" is in the directory
$GOPATH/src/X/Y/Z
The binary for a package with the import path "X/Y/Z" is in
$GOPATH/pkg/$GOOS_$GOARCH/X/Y/Z.a
The binary for a command whose source is in $GOPATH/src/A/B is
$GOPATH/bin/B
When fetching a package the go tool looks at the package's import path to discover a URL. For instance, if you attempt to
go get code.google.com/p/gomatrix/matrix
the go tool will get the source from the project hosted at http://code.google.com/p/gomatrix/. It will clone the repository to
$GOPATH/src/code.google.com/p/gomatrix
As a result, if (from your repository project) you import a package that is in the same repository, you need to use its "full" import path - the place "go get" puts it. In this example, if something else wants to import the "matrix" package, it should import "code.google.com/p/gomatrix/matrix" rather than "matrix".
Even though the GOPATH may be a list of directories, it is generally sufficient to use a single GOPATH for all Go code on your machine. Since all packages retrieved with "go get" have a unique URL (and thus a unique path on disk), having more than one GOPATH is almost never necessary when building with the Go tool.
When the go command is looking for packages, it always looks in $GOROOT first. This includes directories, so if it finds (as in the case above) a cmd/ directory in $GOROOT it won't proceed to look in any of the GOPATH directories. This prevents you from defining your own math/matrix package as well as your own cmd/mycmd commands.