I think the most plausible explanation is one offered by a French architect who has studied the Great Pyramid for eight years and concluded in his theory that it was built with a combination of internal and a small external ramps. I'd have to agree with icabod that the water ram pump and coffer dam or locks theory is too complicated and unnecessary although the Egyptians probably did use water as a lubricant and the Nile to float blocks of stone to the site and possibly used water to level the base by constructing a grid of shallow trenches, fill them with water and chisel them down to the same level. But that doesn't explain how they made each coarse of blocks almost perfectly level. Some archeologists have concluded that the Egyptians might have used crude telescopes for surveying purposes since we have found crude optical lenses in Egyptian sites and we also know that they were capable of extremely detailed machine-turning, drilling, sawing and lathing of some of the hardest rocks on earth to produce bowls and other items. Some unfinished blocks in quarries show evidences of being drilled or sawed.
It's possible ...and likely...that they applied those methods to produce optical lenses as well.
"Ancient Egyptians built the 480-foot-high (146-meter-high) Great Pyramid of Giza from the inside out, according to a French architect.
Based on eight years of study, Jean-Pierre Houdin has created a novel three-dimensional computer simulation to present his hypothesis. He says his findings solve the mystery of how the massive monument just outside Cairo was constructed.
The 4,500-year-old tomb of Pharaoh Khufu, he concluded, was built using a ramp that spirals around the pyramid's interior 30 to 45 feet (9 to 14 meters) behind the exterior surface.
http://news.nationalgeographic.com/news/2007/04/070402-great-pyramid.html
http://www.archaeology.org/0705/etc/pyramid.html
A short video of his theory.......
http://www.youtube.com/watch?v=WYnTlGFPcAc
A better National Geographic video...I watched the whole program on TV when it came out.....
http://www.metacafe.com/watch/yt-lasCXujNPfs/great_pyramid_mystery_solved/
An online book about it......
http://www.scribd.com/doc/24268896/The-Secret-of-the-Great-Pyramid
This guy knows a thing or two about moving large blocks of stone............
http://www.theforgottentechnology.com/newpage1
Egyptian lathe turned objects...
http://www.altarcheologie.nl/egypt/Hard%20Facts%20-%20Lathe%20Turning.htm
Another "pyramid water pump" theory........
http://skepdic.com/refuge/pharoahspump.html
Lots of pyramid links here.........
http://www.world-mysteries.com/lnx_4.htm