FirFirst stage is acquiring and supposedly writing of GPS data in
XMP metadata of image. Second stage is translating it to human
readable form like 'Warsaw, Poland' to write in IPTC/XMP tags.
Second stage can be realised in two ways.
a) don't use GPS but GSM; frankly I don't know how cell towers
are presenting themselves but after quick google looks like most popular mehod is to upload cellid to server to get location; on device database would quickly become obsolete and useless
b) second way is to use GPS data and database which connect numbers with physical locations; to get reasonable precision for whole world such base should be very big, too big to keep on device
As you see, to make 'translation' working n900 has to upload data about my current location to some server.