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The purpose of this is offline GPS. Normally, each cell tower has an identifier and Core Location sends that identifier to Apple and asks for the lat/lon for that tower. This requires a data connection, and the use of data. Since cell towers don't move, however, it's inefficient to keep going back to Apple for that information so they cache it. Now if a tower appears with the same ID as the cache, tada! you have a cache hit and a faster fix with no data use. Which also means you can get a "coarse location" (as in rough) if you are near known towers and don't have a data connection.
That's all this is. It's a cache of identifiers (cell and wifi), locations, and their age (it's a cache, after all). Someone made the decision to never clean it out so they would have more and more information about those GPS "assists" (you know, A-GPS) and so they'd use less and less power and data over time for the places you frequent. It's a great idea, technically.
Practically, yes, you can track location over time. The file is readable only by root and you're free to encrypt your backups for now. I'm sure Apple will either encrypt the file or truncate the data in a future update (I would prefer encryption as I think it's technically sound, but I know many will disagree). I'm also sure someone is considering a toggle for the feature or a button to clear the database. Both are great ideas.
This isn't nefarious, this isn't being sent anywhere, and this isn't as bad as everyone is making it. This is a real feature with a major oversight. That's it.
Put your pitchforks down and please spread the word. Thanks.
How Apple tracks your location without consent, and why it matters : technology