I think it's a service that relies on WiFi access points to determine the location. It can show your approximate location 1.) if you are connected to a WiFi network, and 2.) if the WiFi access point is in the database of the (loki.com) service.
It's not something one would want to use for navigation, but perhaps if a laptop is not equipped with GPS, then this may be the 2nd best thing to help you quickly centre a map on your (approximate) location.