Location services on mobile devices identify your location, and are used by the operating system on the device, and by other third-party apps installed on it.
The information is used for example by mapping apps to give you directions, social media apps will use it to allow users to check into a specific location, or apps may use this data to try to provide you with information that is more relevant to your locality.
Location services are fundamental to the operation of certain apps, for example a mapping application would need to know your location in order to give you directions somewhere, but other apps don’t necessarily need to track your location in order to function.