I'm surprised this would be even legal in most European countries... Then again, MS might not care any more. Companies who are not looking for alternatives today won't ever be looking.
I still expect this feature to roll out worldwide with some legalese fine print that the customer is responsible for configuring and operating the product "in accordance with local laws". I'd be really surprised if MS handles this differently.
The implementation details are sketchy/weak in all sources I can find, but I don't think it's pure (coordinates based) location tracking, but rather a "feature" that will show which WiFi network you're connected to as your Teams status. It's pitched as "what building you're in at the office," which seems like a stretch.
It's also kind of unclear whether the blog post is correct that it would show the name of another network if you connect to it - I'd sort of assume it would just show "Out of Office" instead of "connected to YO_MAMAS_WIFI" or whatever, but who knows.
For meshed networks there is a secondary ID (with a name I do not know) that is used to distinguish between APs, since your device should only talk to at most one AP at a time.
It wouldn't be surprising if they used that for finding the location, but marketing sells it as SSID matching as the people they want to sell it to are most likely not experts in networking.
The ESSID (Extended Service Set Identifier) is the human-readable thing you see. There is an underlying BSSID (Basic Service Set Identifier) that includes the unique identifier for the AP (its MAC address) your mobile unit is associated with.
On Windows you can see this (from an elevated context and, in newer versions, with location services enabled) by running: "netsh wlan show interfaces"
If it's just the SSID it's pretty useless for making sure people are at work. I can totally connect to "Office_CA-SJC-03" from home, or any other SSID you care to name.