Geolocation hides my real location. How does e/os accomplish this? Is it sent through a vpn or some other conduit?
Regain your privacy! Adopt /e/OS the deGoogled mobile OS and online services
Fake My Location is part of Advanced Privacy, there is some explanation on those links.
More generally (in addition to gps) /e/OS uses a form of Network location originally provided by microG through Mozilla Location Service (MLS).
Due to this change in MLS: Mozilla Location Service is retiring · Issue #2237 · microg/GmsCore · GitHub there have been changes for /e/OS perhaps at least partially explained here Use /e/OS’s location system ... What does that option entail?.
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The article doesn’t really explain what process it uses to fake the location.