Earlier quoted context omitted.
There's an Ultra Wideband radio in the iPhone 11 and newer that isn't legal to use in all countries. Apple uses a location request sometimes just to determine if the device can legally run that radio or not.
If that's the case, they wouldn't need to report the location back to themselves, would they? The phone would simply check its coordinates, and turn it on or off.
The original concern was caused because iOS would still activate location services and display the icon during these checks, even if you had turned location services off completely in settings.