an iPhone has GPS - see Understanding privacy and Location Services on iPhone, iPad, and iPod touch with iOS 8
About location precision or accuracy
Depending on your device and available services, Location Services uses a combination of cellular, Wi-Fi, Bluetooth, and GPS to determine your location. If you're not within a clear line of sight to GPS satellites, your device can determine your location using crowd-sourced Wi-Fi5 and cell tower locations or iBeacons.
Apps that can show your location on the screen, including Maps, show your current (approximate) location using a blue marker. If your location can't be determined precisely, you'll see a blue circle around the marker. The size of the circle shows how precisely your location can be determined—the smaller the circle, the greater the precision.
When Location Services is active, a black or white arrow icon appears in the status bar.
Maps, directions, and location-based apps depend on data services. These data services are subject to change and might not be available in all geographic areas, resulting in maps, directions, or location-based information that might be unavailable, inaccurate, or incomplete. Compare the information provided on the device to your surroundings and defer to posted signs to resolve any discrepancies.