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Time dilation is the difference in elapsed time as measured by two clocks, either due to a relative velocity between them (special relativity) or due to a difference in gravitational potential between their locations (general relativity). When unspecified, "time dilation" usually refers to the effect due to velocity.
After compensating for varying signal delays due to the changing distance between an observer and a moving clock (i.e. Doppler effect), the observer will measure the moving clock as ticking slower than a clock that is at rest in the observer's own reference frame. In addition, a clock that is close to a massive body (and which therefore is at lower gravitational potential) will record less elapsed time than a clock situated farther from the said massive body (and which is at a higher gravitational potential).
These predictions of the theory of relativity have been repeatedly confirmed by experiment, and they are of practical concern, for instance in the operation of satellite navigation systems such as GPS and Galileo.