We had an iPhone and a MacBook Air stolen. I was able to track both units at different times. As I understand it the Find My iPhone service uses GPS and cell tower triangulation to locate iPhones. iPhone location outdoors and/or in areas with good exposure to cell towers is very accurate.
For wifi only devices I believe Apple work from a database of wifi points discovered by Apple mobile devices cross referenced to GPS and cell tower triangulation data, derived from those same mobile devices. The location accuracy for this system seems to be significantly poorer.
What I don't understand is why the location for the stolen laptop is reported differently each time it connects to the internet - my laptop location has been given as 6 different addresses all within a few houses of one another. I've noticed the same behaviour for wifi only devices we own that don't leave our house.