Unfortunately, it isn't as precise as using GPS, but it drains less battery life. Google is hoping to get within one-quarter to three miles of a user's location.Google stated that they “use various algorithms to approximate your location relative to the cells nearest you. The accuracy of this information depends on how big an individual cell is. Thus, areas with a denser concentration of mobile towers allow for a more accurate My Location reading. Additionally, as our database of cell locations continues to improve, so too does the accuracy and coverage of the My Location feature.”
My Location" technology is claimed to be faster than GPS; besides being able to cover the inside of buildings unlike GPS; and results in slower drainage of batteries vis-a-vis GPS
Users can access Google Maps for mobile with My Location through the following countries: U.S., U.K., France, Italy, Germany, Spain, Austria, Switzerland, Lichtenstein, Portugal, Brazil, Australia, New Zealand, Belgium, Canada, Denmark, Finland, Sweden, Norway, The Netherlands, Russian Federation, and Taiwan.
More details avaiable here, Also refer the below video to understand the concept, its quite simple.
Google now has your emails, GTalk conversations, search queries, personal info and now your location, What would be next ? Post in your views below.