So my reading of this setting is that toggled on the user gives permission for /e/ to overwrite this url to one of their choice … they might choose to experiment with other options, perhaps based on user feedback … (it could even be a “self-built” new Network location service, but that is clearly not the case today).
Toggled off the user is free to set their own location service (this, I understand, is the default in “microG without /e/”) and it is expected not to be disturbed by anything done by /e/OS … at least, that is my take on the setting.
Network location can be regarded as a “secondary” location service to provide support for GPS … so the subject here is not the “whole location service”.
It might seem counter intuitive (and this may change in future versions of microG) but apparently to use the /e/OS / positon.xyz Network location one should currently keep toggled ON
The Request from Mozilla switch also toggles the custom server. You will need to enable that to use positon.xyz. This toggle is a little confusing right now but I believe this will be made clearer in the future.
Mention of ‘/e/OS’s location system’ made me do a little digging. Allowing /e/ to choose results in using the Positon.xyz service. Looking at positon.xyz, we see a complete absence of any information regarding who / which organisation owns, maintains, or runs that website and the service it offers.
A bit like cleanapk.org. I wonder whether positon.xyz] is actually ‘/e/OS’s location system’?