GCC -fPIC option

I have read about GCC's Options for Code Generation Conventions, but could not understand what "Generate position-independent code (PIC)" does. Please give an example to explain me what does it mean.

Position Independent Code means that the generated machine code is not dependent on being located at a specific address in order to work.

E.g. jumps would be generated as relative rather than absolute.

Pseudo-assembly:

PIC: This would work whether the code was at address 100 or 1000

100: COMPARE REG1, REG2
101: JUMP_IF_EQUAL CURRENT+10
...
111: NOP

Non-PIC: This will only work if the code is at address 100

100: COMPARE REG1, REG2
101: JUMP_IF_EQUAL 111
...
111: NOP

EDIT: In response to comment.

If your code is compiled with -fPIC, it's suitable for inclusion in a library - the library must be able to be relocated from its preferred location in memory to another address, there could be another already loaded library at the address your library prefers.

I'll try to explain what has already been said in a simpler way.

Whenever a shared lib is loaded, the loader (the code on the OS which load any program you run) changes some addresses in the code depending on where the object was loaded to.

In the above example, the "111" in the non-PIC code is written by the loader the first time it was loaded.

For not shared objects, you may want it to be like that because the compiler can make some optimizations on that code.

For shared object, if another process will want to "link" to that code it must read it to the same virtual addresses or the "111" will make no sense. But that virtual-space may already be in use in the second process.