Just tested this. Navigation doesn't work when location services is disabled. The overall CarPlay experience still works but for any location related tasks it keeps asking me to turn on location services. I tested Maps, Google Map, Waze. Same goes with wired CarPlay so maybe Audi's implementation of CarPlay doesn't fall back to the car's GPS.
Thanks for that, interesting to know! On my ford with sync 3 I assume it falls back to the cars gps when wired as you say