Thanks for the response, we've seen this behavior indoors. It may be that some applications will choose to show a single point if the error is below 20 meters or so. Looking through a record of our location updates, iPhones seem to have a habit of broadcasting 5 meters error, 10 meters, 20, and so on. Even when indoors.
We don't have as much data on android phones yet.
You're right about how the laymen might interpret potential error. The team I'm on is also concerned about that, but I know on the android that as the map tries to find your location through GPS, that it displays a large radius approximating your location through a cell tower, and I had always figured that would communicate the notion of "error" pretty clearly to most people. Maybe most people don't pick up on that?
By the way, The largest error we have received so far seems to be at 2015-11-17 23:11:11.421.
33149.68 meters large
"So I'm sooomewhere in this 33 kilometer radius"
Better than nothing I guess!