This is because Apple is silently building a survailance network for lost devices, the UWB chip in the iPhone 11 is also in the Airpods Pro and will be on all future Apple things. Say I leave my Airpods pro in the conference room of an office I was at earlier for a job interview... with Apple's UWB magic, any iPhone 11 can be used to find my airpods, not just mine... This is for locational discovery of all future apple devices, this mesh network allows someone to use your device as the exit to apples location servers.
If you read the white paper it makes it clear that location information isn't limited by policy (permissions, etc), but rather by actual cryptographic techniques that need your devices to access. It is designed so that you can always have find my X working without simultaneously requiring your (unencrypted) location being sent to apple.
