Sorry to sound so stupid but if that's the case, is my data plan somehow being used? I turn off Cellular Data (disable LTE) in Settings too.
Not stupid at all - it is kind of weird that it does it without using your data plan.
Think of it like a an old-school television with bunny ears: there's a signal out there that your tv can pick up on and it's a signal that's separate from cable - it's called over-the-air (OTA). The tv antenna picks up on that signal and can show you programming.
Same concept but the signal is just floating out there and your smart phone is the "television" picking up the signal.
Another way to think of it is GPS in your car (Garmin or TomTom being the predominant examples) - you don't need a data network to use that - you just need the GPS device and the maps loaded. Your smartphone is essentially acting like one of those devices.
Keep in mind, it can take some time to update your location (GPS works faster on a data network because of increased coordination capabilities from the extra "layer" of information) and you need to download off-line maps to use it - Google Maps only gives you a certain radius of map information.