If you have Google Maps on your mobile phone, you can ask the map to show your location. When you do this, Google can know where you are in one of two ways. First, they can triangulate on the cell towers. Secondly, if you have GPS in your mobile phone, they can use the satellite technology to find you.
The impact of this is that people who use Google Maps with location, search twice as often. Also people use Google Search twice as much if they are searching for something locally, and use Google Search less if it is not a local search.
My favorite reason for using Google Maps with location awareness is to see when 101 is congested - the highway is colored red on the map when it is busy.