pizzadequeso
Apple's article remains vague about how exactly this will be implemented:
With the limit precise location setting, you can limit some information that cellular networks may use to determine your location.
[...]
The limit precise location setting enhances your location privacy by reducing the precision of location data available to cellular networks.
[...]
With this setting turned on, some information made available to cellular networks is limited. As a result, they might be able to determine only a less precise location...
source: https://support.apple.com/en-us/126101
It also seems to work with just a handful of carriers (would be interesting to know why).
Therefore, your question is probably difficult to answer in terms of how and if this could be implemented until further information is given.
Depending on threat model and cell size of the tower a device being connected to (which the feature doesn't seem to obfuscate), I suspect one's definition of "precise location" may differ from Apple's.