A digital orthophoto is a computer-generated image of an aerial photograph or aerial digitial image in which displacements caused by camera orientation and terrain have been corrected and the image has been projected to a standardized map projection.
In other words, digital orthophotos are special photos because they have been processed to be spatially accurate.
Unlike most photos, orthophotos have a uniform scale across the entire photo area. That is, orthophotos are scalable in any direction. They are not just pictures taken from an airplane which have distortion from many sources. You can measure distances on orthophotos. The accuracy determined by the particular orthophoto project. However, orthophotos are only spatially accurate at ground level. See Apparent Spatial Errors and Orthophoto Building Lean for more.
Since most orthophotos are in a digital format, they can be shared and manipulated further, as well as integrated into various applications.
To make an orthophoto, the original aerial images are georeferenced and processed to remove virtually all the distortion due to terrain and camera position. That is, the raw images have been stretched to fit the ground terrain. Most of our orthophotos are taken from airplanes rather than satellites.
Orthophotography Definitions are helpful to understanding orthophotography.
Orthophotos deliver a new standard for spatial accuracy. Read Rectifying Vector Data Layers with Orthophoto Imagery for a discussion of errors and a description of the relationship between our vector data and the orthophotos.