Looks like Living Language isn't just about figuring out the user's current locale. It's about learning local slang and dialects based on what Swype users are typing, in order to give users a dictionary that's much more specific than something generic like "en-US".
For something like that you'd legitimately want to know where someone is down to the city or even neighborhood. Though checking their location 4000 times/day still sounds egregious to me. And possibly misguided - the way I speak English isn't going to change just because I've gone to Petoskey for the weekend.
I'm not saying it's legit or required, but that's their explanation from the link there.