It's at the kernel level. Each process has its own current working directory. On Linux, these CWD values are exposed at `/proc/[...]/cwd`. This value affects the resolution of relative paths in filesystem operations at a syscall level.
On my Fedora system, /usr/bin/cd is just a shell script that invokes the shell builtin:
#!/usr/bin/sh
builtin cd "$@"
I suppose it could be useful for testing whether a directory exists with search permissions for the current user safely in a multithreaded program that relies on the current directory remaining constant.