moddel To use Wi-Fi access points to determine location, it is necessary to look up the APs that are near the phone in a database mapping APs to locations. A complete database is too large to be practical on phones. If your phone asks a remote database to look up APs near the phone, the remote database knows approximately where the phone is.
At present the choices for the current GrapheneOS network location implementation are asking Apple's servers for location information or asking a GrapheneOS proxy server to ask Apple's servers. So at present one must choose who finds out the IP address of the device that wants location information. One can also choose to use the Google Play location service, in which case Google finds out where the phone is. Different people may prefer revealing information to different parties.
I believe there are plans for the GrapheneOS implementation to work from a downloaded database of cellular sites and/or from downloaded partial databases of Wi-Fi access points. But none of this is easy code to write.