In Guild Wars 2, the game world will see the inclusion of a functional Z-axis. Assuming that you consider the ground upon which characters walk the XY-plane, the Z-axis (and Z-plane) extends perpendicularly up and down from it. A position in the Z-direction specifies altitude. In the original Guild Wars, altitude existed primarily visually, but almost never logically: for example, being on a bridge hundreds of feet above foes would still alert the foes and allow spells and some weapons to strike, based solely on players' and foes' positions in the XY-plane.
The addition of a Z-axis that is not purely visual is expected to fix such issues as these, while also allowing characters to jump over obstacles, slide, and swim.
- Z-axis in Wikipedia.