cell phones have no information about the direction of cell towers that they can talk to

That's true of any radio, including Bluetooth, which is why triangulation is needed. It looks like 10 meters accurate should be feasible with 5G alone, which should be plenty for navigation purposes. Add GPS, and the article claims 1/10 meter precision. Maybe that's a little worse in a city with large buildings, but it'll probably be pretty close.

a number of websites now request one's location to do things like provide nearby stores

Yeah, I just type in a nearby zip code or city, and it works fine.

use the camera to identify the location?

It could know what store you're in, but not which particular branch of that store. As in, it would know you're in a Bath and Body Works or whatever, but not the downtown mall outlet. That should cover most use cases, and the others could request temporary location access or present a list of possibilities. That way users know when they're potentially being tracked.

I don't know why it would ever need to know your precise location, it should be able to be very helpful by just parsing the environment and data (e.g. email) you've granted it access to.

Are users gonna be expected to walk around with the camera recording and seed this thing?

Nah, just download it and cache it, and update it when home. Storage is cheap, I can get 1TB of NVMe storage in a tiny (M.2 2230) form factor for <$100. All OSM data is 100GB, so I highly doubt local storage would be an issue. The only limitations here are artificial (e.g. huge markups for phone storage now that SD storage is dead).

So from my perspective, we can solve the limitations here fairly easily, it's just Apple and Google trying to lock in customers. Maybe I'm missing something though, but avoiding most of that has gotten me pretty far.