Id suggest FB & co also uses location tracking & proximity to expand their social graph continuosly? Most people just dont care about these privacy settings, and if you have a vast number of users, it doesnt matter if ther are 10% "techsavy people" because the mass is just big enough to create profiles on which you then easily can compute/guess other connections & joints in the social graph.
Yes, that’s my assumption, although IIRC I never gave FB location permissions, so it might be temporarily sharing an IP address by being on the same WiFi or something. Come to think of it they had access to WiFi SSIDs as well in the early days even when location permissions were off.