(user from Denmark, Europe)
Furthermore, the iPod Touch receives information about nearby wifi networks for local storage (offline usage).
When I'm walking around the area with my iPod Touch (without any internet access) it is still able to tell me where I am.
It seems like the local information received is in the range of about 2 kilometers (about 1.25 miles).
This is a GPX track from a bus ride a few weeks ago heading north, logged with my iPod Touch:
http://maps.google.dk/?q=http://stock.ter.dk/bustur_touch_2.gpx
At the northest point of the track the iPod Touch couldn't find the local position anymore. The iPod wasn't online at any time.
Unfortunately it seems like it flushes the local database whenever it gets online. If I travel away from my home I can see my position until I reach about two kilometers away. If I go online at my destination (e.g. a friend's house) and travel home I can only see my position for a few kilometers away from my earlier destination and nothing from that point before I reach my own home again. It really would be cool if it was possible to store more information locally.
I'm pretty sure the iPod use Google's database as well as the Google Street View vans have been around Denmark pretty thoroughly last year. All the positions seem to be snapped to roads as well where the cars were positioned when driving around.
On another node; several public means of transportation in the metropolitan area of Denmark is now fitted with some kind of Internet access - usually free access with commercials injected in the web pages. This helps being online in trains or the most frequent buses (however not that one I was on when I logged the above track).
But as the wifi geolocation service is based on the idea that an access point is stationary the results for positioning when riding a bus or train could usually put you at that station where the train (carrying the access point) just happened to be when the Google vans were driving around. I hope the self healing mechanisms in Google's (and Skyhook's) databases could "invalidate" these access points.