Earlier quoted context omitted.
Screw any app that really thinks it needs my precise coordinates in the foreground, let alone the background. Turn-by-turn directions in maps is the only exception I've found in 10 years of iPhone use.
Apple's API don't discriminate with regards to precision. An app that shows nearby stores with a 1km radius precision requires the same level of permissions as an app that's trying to do 1m precision.
There's currently no explicit penalty for requesting too much information, but the battery power indication could probably get users to uninstall apps wasting energy, and it can even get you app terminated.