When you use an application that requests a precise location the phone uploads anonymous data to Apple which consists of the cells you are talking to and any WIFI access point names in the range.
It's exactly how Android does it too.
This data is uploaded and not stored in the database file contained on the phone.
It is used to get a more rapid position and is known as a hybrid positioning system of which there are many:
http://en.wikipedia.org/wiki/Hybrid_positioning_system
Apple used to use SkyHook but are now building up their own database, hence the upload of data.
Edited by deleted (Thu 28-Apr-11 22:37:38)