The router doesn't have
anything to do with it.
Read this:
http://en.wikipedia.org/wiki/Skyhook_Wireless
"Using the MAC addresses of nearby wireless access points and proprietary algorithms, WPS can determine the position of a mobile device within 2030 meters.
It provides service similar to GPS without GPS hardware" (Emphasis mine)
"At the Macworld Conference & Expo in January 2008, Apple CEO Steve Jobs announced that both the iPhone and iPod Touch will use Skyhook's WPS as the primary location engine for Google Maps and other applications.[5] However, Apple revealed that starting with iPhone/iPad software 3.2 in April 2010, its devices no longer uses Skyhook, but relies on its own location technologies.[6]"
Skyhook's tech is for locating your device based on the MAC addresses of nearby routers. The routers don't know where they are, but Skyhook (and now Apple) maintain a database of where the routers are. I don't know if the iOS devices themselves can update that database, but it's possible.
If you still somehow don't see how it's possible to track location based on router MAC addresses and signal strength and a database lookup then I give up.