What is it? It's the arc formed by the orbit or rather the position of the satellites above the equator. If you lived at the equator the satellites would be in a straight line from east to west horizon and 90 degrees vertically above you.

Live anywhere else and you get an arc whereby the satellites are still in a line from east to west horizon but no longer directly above you. They are lower in the sky to the south if you live north of the equator, and to the north if you live south of the equator.

The arc is elliptical because your viewpoint is not side on to the arc. As the picture shows, you would need to hover above one of the poles to see that view. Instead the arc is squashed because you look at it from an angle, this angle is your Latitude.

To track an arc from the equator is easy, simply turn in azimuth, the elevation being set to 90 degrees no declination needed.

To track the same arc away from the equator requires the elevation and the declination.

Further Definitions:

Any position on the earths sphere can be defined by declination and right ascension. These are similar to latitude and longitude except that:

Declination is measured from the north pole, not from the equator (the way latitude is defined)

Right ascension is traditionally given not in degrees but in time:
in hours, minutes and seconds.

Declination and right ascension are known as "equatorial coordinates." These quantities are coordinates, because the numerical values of these two quantities locates an object on the earths sphere. They are equatorial coordinates, because they locate the position of an object relative to the earths equator.

Declination works on the surface of the earth much like latitude does, that is, declination measures the angular distance of a satellite north or south of the Equator.

Lines of declination are analogous to the parallels of latitude on the earth. An observer on the Equator has a declination of 0°. The declination increases as you move away from the Equator to the Poles. At the North Pole therefore, the declination is 90°.

When working with latitude on the earth, we specify whether the antenna lies in the northern hemisphere or the southern hemisphere of the earth by specifying the latitude as north or south, that is, N or S.

I will now go away and try to find out exactly how to set up a polar mount. The elevation and azimuth are easy enough but understanding the declination is very confusing. I compiled the information for this article from many hours on the net.
I would really like to learn about this as I have a polar mount which tracks perfectly, but I set it up by trial and error.

What is the theory and practice behind doing it right first time?
If no one else knows I will find out and report back soon.