(No one I talked to all day seemed to share my curiosity on this.)
Then today, I got fed up with solving this riddle and just looked it up.
http://www.skyhookwireless.com/howitworks/
Looks like the heart of it is a massive, self-healing, wardriven database.
Accordingly, the time-to-first-fix is phenomenally faster than GPS. It also thrives indoors in well-populated areas where GPS might be unusable.
http://www.skyhookwireless.com/howitworks/coverage.php