Your iOS device may determine your location via two methods:
1) Satellite GPS reciever (WIFI-only iPads do not have a satellite GPS reciever or cellular radios)
2) Network based location
2a) Cellular towers (WIFI-only iPads do not have a satellite GPS reciever or cellular radios)
2b) WIFI networks

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Satellite GPS reciever
Pros:

• Works almost anywhere on Earth
• No data connection required
• Almost always more accurate outdoors

Cons:

• Takes at least several seconds to get a good fix.
  
• Won't work in well in many buildings. (You really need a clear view of about 1/3 of the sky)
  
• Uses a lot of battery.
  

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Network based location
Pros:

• Faster location fix
  
• Works in places that satellite GPS may not such as parking garages, large buildings, etc
  

Cons:

• Requires data connection
  
• Less accurate. If several WIFI networks are not nearby, and only cell towers are used, the result is usually 1-2 kilometers off even in populated areas