Basically it uses dead reckoning then. Cool stuff! There are other velocimeters, accelerometers, etc. that do that as well, the important part is the amount of error that builds over time. I wonder what this "quantum compass" has for error?
Well, quite an improvment over traditional 'dead reckoning'. This is basically a more accurate inertial navigation system.
The cumulative error always exists because any sensor introduces error (I'm ignorant of anything "quantum" though). This means if you have several inputs (velocimeter, accelerometer, gyroscope, magnetometer, etc.), you are introducing multiple forms of error, each with it's own error band. Interestingly, there is an algorithm called a Kalman filter that takes in all these inputs and can spit out a best estimate for navigation, it's pretty amazing.