A dated but informative description by the Province of Alberta. They focus here on GPS and GIS technologies, but precision farming is a lot more than that. Data can be collected and analyzed at many different levels.
“[These technologies] will enable farmers to use electronic guidance aids to direct equipment movements more accurately, provide precise positioning for all equipment actions and chemical applications and, analyze all of that data in association with other sources of data (agronomic, climatic, etc). This will add up to a new and powerful toolbox of management tools for the progressive farm manager. “
(Photo from Flickr user NASA Goddard Space Flight Center, Creative Commons License)