I'm pretty sure it is on by default: I'm both happy and paranoid about this.
I've found a phone using this. The spouse left the phone on the car: It fell off a bit past where we had stopped. This was on a mountaintop, in the countryside, traveling back from Sweden to Trondheim - not too far from the Swedish border. Location services meant we could head out and look for it. We could see if it was moving (it wasn't, so it likely wasn't stolen) and we were able to use my phone to find his. It was pretty accurate, even in that location. The phone was only a few months old. It had some scratches, but was otherwise fine. (I think the screen is now going out, but he drops his phone regularly at work and the waiting time for a new screen was 5-6 months to get the screen).
But I do understand that it means that governments could track us: Companies obviously are and I shudder to think of a motivated, angry ex or a motivated stalker. Turning the phone off doesn't help, and I don't know how far "turning off tracking" goes since there are ways to get, at least, a general location using tower information. I keep hoping that it'll turn into a greater good sort of thing, but this will only happen if governments change laws to better match people's behaviors so long as they aren't endangering others. I don't think that would happen in the US without major change, but I have hope where I'm at.