Find my friends location accuracy when saying live

The margin of error for location accuracy with recent iPhone devices can vary based on the technology being used, environmental conditions, and the specific location of the device.

I would classify a 2 to 3 km error as being unusual [1], but it's certainly not unheard of depending on the conditions and technologies being used.

The various location gathering methods that iPhone's use vary, typically using a combination of:

1. GPS: In ideal conditions with a clear view of the sky and strong satellite signals, GPS-enabled devices can achieve high accuracy, typically within a few meters (4-10 meters). However, in urban areas with tall buildings or dense foliage, the margin of error may increase due to signal obstruction, resulting in accuracy ranging from 10 to 30 meters or more.
2. Assisted GPS (A-GPS): A-GPS primarily provides better performance by compensating for weak GPS signals, so it would follow GPS in terms of accuracy.
3. Wi-Fi Positioning System (WPS): WPS accuracy can vary depending on the density and accuracy of the Wi-Fi network database used by the device. In urban areas with extensive Wi-Fi coverage and accurate database information (think of areas that well covered on street view by Google Maps and Apple Maps), WPS can provide location accuracy within 10 to 50 meters. However, in rural or less densely populated areas with fewer Wi-Fi networks, accuracy may be lower.
4. Cellular Tower Triangulation: Location estimation based on cellular tower signals typically has a higher margin of error compared to GPS or Wi-Fi positioning. Depending on the density of cellular towers and the accuracy of signal measurements, the margin of error can range from several hundred meters to a few kilometers.

[1] For additional information on GPS accuracy, the following site may be helpful: https://www.gps.gov/systems/gps/performance/accuracy/#how-accurate

If it's possible the person you're tracking has the wrong device selected, you'd need to take a look at Find My Friends app, there should be a 'Share My Location From' setting (I've never used this feature but the way it is described seems like it would have to be done from their phone rather than yours). But on a practical level, it should be fairly obvious when you're looking at a device that is always with the person, e.g. an iPhone as opposed to something that might only be with them on occasion, e.g. an iPad.

Another possibility:

Does your friend have multiple Apple mobile devices ? (e.g. an iPhone AND an iPad)

If so, your friend might NOT physically have THE device in his possession which is designated to report “HIS” position.

Which specific device is designated to report an “individual’s” position is a setting on your friend’s device(s).

The setting only appears when multiple “mobile” devices are on the same AppleID.

Nice, concise treatment of the various geo-locating methods employed. 👍

Re: “… there should be a 'Share My Location From' setting (I've never used this feature but the way it is described seems like it would have to be done from their phone [or iPad] rather than yours) … “

Correct.

It’s specifically located in Settings -> AppleID -> FindMy -> My Location.

For devices with cellular connectivity, it is about nearby connectable /supported cell towers. With just one, no triangulation is possible. A cell tower may often have a reach of 1–3 miles. Could that be it for that location?