The My Location feature takes information broadcast from mobile towers near you to approximate your current location on the map - it's not GPS, but it comes pretty close (approximately 1000m close, on average).
I have the feature downloaded on to my Crackberry. It really varies. When I am home, it comes within a block of my house. When I am at work, it is about 4 miles off. I also had it on my road trip at Christmas between Colorado and Washington state. There were a lot of areas in Wyoming and Montana that the signal was so bad it had my location about 100 miles off.
It is still a pretty cool feature, especially how much I travel around the country.