[amirathi]

Data quality and coverage of OSM data varies widely. Their philosophy is to accept low quality data in an uncovered area and then improve it as multiple traces along the same routes come in from contributors. So my understanding is quality quickly increases as the community of contributor in the area grows.

Besides OSM data source are not limited to individual's GPS traces, they also include publicly available satellite imagery, official data released by government agencies under appropriate licenses. E.g. In the United States, OSM uses Landsat 7 satellite imagery, Prototype Global Shorelines from National Oceanic and Atmospheric Administration (NOAA). They have managed to get their hands on high quality data sources in a lot of countries.

[maxerickson]

In the US there is also pretty active aerial imaging, between state and local efforts and the National Aerial Imaging Program. The pdf linked at this page seems to have a nice discussion of it:

http://pubs.usgs.gov/fs/2009/3055/

[rmc]

Microsoft allow people to use the aerial imagery that's on Bing Maps to trace things into OSM. Previously Yahoo allowed their aerial imagery to be traced from.