Thanks for that, but no help at all really. It simply re-iterates that WiFi is used for Location Services which was never at issue. The question was, how?
It has since been mentioned to me that a database is maintained of the location of all WiFi networks, hence a Mac needs to know about a nearby WiFi network in order to determine its location. This would certainly be possible. iPhones and such like could report their (GPS) location and the name/ID of their connected WiFi network and over time, the database will include the location of every WiFI network - even private ones like mine.
I don't know for sure this is how it is done, but it sure would be possible and I don't have a problem with that as such. But this method then relies on any device actually having active WiFi in order to determine its location which is rather limiting. With all the collaboration services now possible between OS X and iOS, it would be entirely possible for a static Mac with no active WiFi to query a nearby iPhone (or similar) and say "where are we", hence eliminating the requirement for active WiFi. But maybe that's a bit too advanced.
Be interesting to hear from anyone with certain knowledge of HOW Location Services uses WiFi.