I just got my National Geographic Geno 2.0 results, and they have a good explanation of ethnicity analysis, which I have copied below:
Your percentages reflect both ancient and recent genetic influences.
What do you mean—ancient and recent?
Human genetic patterns have been created over tens of thousands of years as our ancestors migrated around the globe. People living in the same geographic region are more likely to share similar patterns of genetic markers than people living on opposite sides of the world, because their ancestors were more likely to have encountered each other and had children together. Over time, this has made people from, say, Senegal more similar to each other genetically than they are to people from China.
Migration has also served to disperse these regional patterns over time. For instance, the spread of agriculture from the Middle East into Europe also dispersed Middle Eastern genetic patterns as these early agriculturists moved into Europe. This is why someone who is say, Irish and Scottish on both sides of their family going back many generations would show Southwest Asian and Mediterranean components in their regional affiliations—not because their grandparents were from those parts of the world, but because over thousands of years, all Europeans have mixed with people from these regions and have retained traces of this in their DNA.
But your results also reveal details about your more recent ancestry.
If your parents were from very different parts of the world—say Denmark and Japan—this would be reflected in your regional percentages. In this case, since you get half of your genome from your mother and half from you father, you would be half Danish and half Japanese. At the genetic level, this would show up as half of the regional percentages that each of your parents had—Northern European, Mediterranean, Northeast Asian, and so on.
The percentage of your DNA that comes from each of your ancestors drops by half as we go back through the generations—you are carrying half of your genome from your mother and father, but only one-quarter from each of your grandparents. Because of this, our ability to see your recent ancestry decreases with each generation in the past. If, say, your great-grandmother (three generations in the past) was Native American, you should see that roughly 13% of your DNA is Native American. Our limit is six generations, which would represent around 2% of your DNA. Beyond that, we can’t be certain that the percentages are significant, and this is why you won’t see regional affiliations of less than 2%.
People with recent ancestry from very different populations can have a mix of these regions that is not typically seen in indigenous populations. Hispanics, for instance, will have some of the typical European components from their European ancestors, but also Native American and even African components as a result of the recent mix of world cultures and populations that has occurred in the Americas over the past 500 years.