So if Mozilla wants to monetize location data, what does this mean for all the custom ROMs that use Mozilla's location provider instead of Google's?
Nothing, because they dont sell location data, this just seems like a routine warning that pops up when ToS and Privacy policy changes, and since they have clarified their position on this matter, (not to mention the lack of alternative FOSS web engines). We really shouldn't let this bother us
Of course i might be wrong and it may come out that Mozilla has turned heel(lot of heel turning happening lately)
My (probably incomplete) understanding is: phones have a GNSS chip (such as GPS, Galileo, or Glonass), but getting location from that takes a long time and a lot of battery. So they estimate location based on other information such as what cell tower they are connected to and the list of available wi-fi networks. This requires a database with all that info, which Google built through its Street View cars.
So the location provider is a service to which your phone sends all the info it has and which replies with an estimate of your location; which means it handles a lot of sensitive data.