Apple has always allowed iOS users to deny location services, app by app (and often “all the time” vs “only when using the app”) as well as turning off Location services completely.
They also showed in iOS Prefs/Privacy/Location Services/what apps have been requesting the location data.
I am pretty sure this new “feature” is a real time user alert with ability to approve or deny on the fly.
(Swordmaker ?)
You got it right from what I’ve read on it.