For reasons having to do with the spatial geometry of the satellites and the receiver, GPS altitude errors are inherently much larger than the horizontal errors. For an application like a running watch where it's reasonable to assume the user's altitude is not changing very much, they probably ignore or greatly smooth the vertical measurement when calculating distance and speed.
For what it's worth I have a Garmin eTrex handheld GPS designed primarily for hiking which has a built-in barometric altimeter sensor to aid the raw GPS and it does much better than a ForeRunner in tracking true altitude.