This feature has been around for a while, at least the last year in our tenant as a voluntary feature and I genuinely like it to know if someone is in the office to help with something only according our on site systems or teleworking. Now we are unique since we have an air gapped system we need to maintain in addition to our internet connected system so there’s a real benefit to knowing if someone is around to work on an on-site issue.

If the concern though is that your employer is tracking you then the issue isn’t that Teams supports a location feature, it’s that you work for a shitty employer that doesn’t trust you and give you agency to do your best work. No feature in a productivity suite is going to change that, and it’s likely they are tracking work location anyways through things like VPN logs. This doesn’t change that.