Velocity made good, or "VMG", in sailing and specifically yacht racing, is the speed of a sailboat in the direction of its destination. This is less than the speed over ground(SOG) unless the boat is sailing directly towards it's destination. The concept is useful because a sailboat often cannot, or should not, sail directly to a mark to reach it as quickly as possible. Sailboats cannot sail directly upwind. It is usually less than optimal and can be dangerous to sail directly downwind. Instead of sailing toward the mark, the helmsman chooses a point of sail that optimizes Velocity Made Good (either towards the destination - or towards better winds).
Boats cannot sail directly into the wind, requiring the sailor to alternate between headings, which are commonly called "tacks". On a tack, the sailor will generally point the sailboat as close to the wind as possible while still keeping the winds blowing through the sails in a manner that provides aerodynamic lift to propel the boat. Then the sailor turns slightly away from the wind to create more forward wind pressure on the sails and better balance the boat, which allows it to move with greater speed, but less directly toward the mark.
Determining the velocity made good usually requires computation and instrumentation.
For example, if a boat wants to go north in a northerly (wind coming from the north) and on a heading of 60 degrees (NE) the speed of the boat is 5.0 knots. Falling off to 65 degrees NE accelerates the boat to 5.2 knots. Turning up into the wind to a heading of 55 degrees NE causes the boat speed to drop to 4.0 knots. These data indicate the trade-off between speed and progress toward the upwind mark (to the north in this case). Finding the heading that moves the boat most quickly towards the mark requires basic trigonometry. The northward component of the boat's velocity vector is found by multiplying the boat speed by the cosine of the angle between the true wind direction (north) and the sailboat's heading.
In this case, the optimal VMG is obtained on a heading of 60 degrees off of the true wind (60 degrees NE or 300 degrees NW). Turning up into the wind (more towards the mark) makes less progress towards the mark because the boat slows down too much. Turning downwind speeds up the boat, but yields a course that leads too far away from the mark for the increased speed to be a benefit.
Most GPS units will indicate the VMG towards a mark without any sailor math.
The general concept of a boat's VMG as stated above is: