My iPhone7 (iOS 10.1.1) displays a "Phone App" (the icons is the same one that you make calls from) on the Settings > Privacy > Location Services page. My wife has same phone and hers does not. AppleCare does not show this on their lab phones either.
Interestingly, when I first saw this, I only had the choice for "never" share, which was unchecked. So I checked it, but couldn't uncheck it. About 2 hours later, I had 2 additional options "While Using the App" and "Always" for a new total of the standard 3 choices.
Apple is baffled and looking into it. Anyone have the same problem?