I know it's used in the atti mode.
But is it used for altitude readings if the GPS stops working ?

The only altitude input the Phantom uses comes from the barometer.
GPS altitude data is too inaccurate to use for flight.

That's odd.
My handheld GPS gives me altitude.
Plus if it's within 5 feet horizontally why not vertically ?

roymoon Posted at 2016-9-26 09:16
That's odd.
My handheld GPS gives me altitude.
Plus if it's within 5 feet horizontally why not verti ...

Try Googling 'gps altitude', you will find a whole range of articles describing why GPS altitude is not accurate. It is mostly to do with the fact that in the vertical direction the satellites are not suffiiently seperated angle wise to give accurate readings.

roymoon Posted at 2016-9-26 09:16
That's odd.
My handheld GPS gives me altitude.
Plus if it's within 5 feet horizontally why not verti ...

It's not odd at all - it's geometry.
Garmin explain it here:
        How accurate is the GPS elevation reading?
GPS heights are based on an ellipsoid (a mathematical representation of the earth's shape), while USGS map elevations are based on a vertical datum tied to the geoid (or what is commonly called mean sea level). Basically, these are two different systems, although they have a relationship that has been modeled.

The main source of error has to do with the arrangement of the satellite configurations during fix determinations. The earth blocks out satellites needed to get a good quality vertical measurement. Once the vertical datum is taken into account, the accuracy permitted by geometry considerations remains less than that of horizontal positions. It is not uncommon for satellite heights to be off from map elevations by +/- 400 ft. Use these values with caution when navigating.

Check the detail of your handheld.
If the altitude shown is stable and relatively accurate, your GPS has a barometer too just like the Phantom.
Check the specs to be sure.
Many GPS units made in the last few years include a barometric altimeter which is fine unless you try to use it in a pressurised aircraft.

roymoon Posted at 2016-9-25 18:16
That's odd.
My handheld GPS gives me altitude.
Plus if it's within 5 feet horizontally why not verti ...

I don't know if specs have changed or not, but the rule used to be that altitude accuracy was one third the accuracy of lat/lon.