The latter. I actually really want Apple to provide an option to request access to the photos without location, and remove the location data when reading in the photo metadata. But they don't — yet, at least.

(Disclaimer: I worked on Batch as an intern this summer, but I don't speak for them.)

If you want to access photo files with meta data and/or implement your own photo picking UI, then you need location access permission. If you use Apple provided photo picker (with has it's limitations) and you just want to get picture without meta data in the file, you don't need location access permission.