No it is not nonsense at all!
Location Services is just reporting the last known position fix.
Nope. I don't have Location Services on by default (for battery life & privacy concerns)....so my last fix would have been where I was last time I had to use maps rather than where I am now when I don't need maps.
Anyway, believe what you like, I don't really care, but I reckon the reality is you're just using it wrong.