n2gwtl What does "By default, location requests are rerouted to a reimplementation of the Play geolocation service provided by GrapheneOS" refer to?
When software people talk about service, they often mean "something that is behind an API". Two implementations of a service may behave differently internally as long as they are arguably both doing the job.
The inherent job of a location service is to tell you where you are. One way to do that is relying on satellite signals. Another way to do that is relying on satellite signals plus a database of cellular-tower locations and Wi-Fi base-station locations.
The GrapheneOS "reimplementation" of Google's location service is not accessing Google's database or -- so far -- accessing any other similar database.
The sentence after the one you quoted is: "You can disable rerouting and use the standard Play services geolocation service instead if you want the Google network location service and related features". The Google implementation is faster, works better indoors, and also maps locations to street addresses, which the GrapheneOS implementation does not at present.
At present your options are using Google's implementation of the location service, which relies on Google's code and Google's database and may well result in Google tracking you, or relying on the satellite-only implementation.