As far as I can tell, the phone will triangulate your position first as this is quicker. However, it is less accurate. Once a connection has been made to the GPS, it switches to that, and your location should be much more precise.
I have seen the phone give up while trying to connect to the GPS. Usually while I am in doors, or around some other structure blocking the view to the sky. It displays a message somewhere along the lines of
Could not find your location right now
Every application has to ask your permission before getting your location. Microsoft is very strict about this even for 3rd party applications. I believe they even have to provide a way to turn it off. (I could be wrong on that one) Dig around in the app settings to turn it off.
Also, under your phone settings is a
Location section. Turn that off to disable location all together. Please note that turning your Data off does not turn off Location Services.