For example, a full month of hourly weather data for a single Canadian station is 131KB (pulling from the Climate Canada site), meaning that if you wanted an hours worth of data for the ENTIRE country you're looking at less than ~800kb.
But if you just limit it to a geographical subset, say the lower mainland of BC, or even just a single town, then you can eliminate pinpoint data about yourself. Knowing that a person is in Abbotsford is far less invasive than knowing that they went to the Shoppers Drug Mart at 8:46 PM after searching for cold medicine.
This isn't a black and white thing, I wish that I had more control over my iPhone. I would love to be able to tell it to report a general location (somewhere random within a 10km of my actual location) to some apps, and a precise location to others. I get that Wunderground has server bills to pay, and I'm not paying them, but I would imagine that there is still a viable ads based business model that doesn't get quite as invasive.