This is quite a long winded question, you can just skip to the last sentence if you don't care about the background info.
I just tested out HTML5 geolocation using Firefox 3.5+, and it managed to find my house, literally my exact address. I've been reading about how it works but can't find any detailed information, it says it collects information about local access points and then forwards this information to Google.
I checked this out by testing it out on my wired PC, and it wasn't even close. So it definitely uses wireless. I checked out another service called Skyhook which works similarly, and their "How it works" page says they have a database with thousands of wireless points stored, so when you connect it simply looks up wireless points around you.
Sounds like a perfect secondary job for the Google Street View van, though everywhere I've read I can't figure out if Google uses the same technique.
I'm wondering how Google's geolocation works, whether they also store a huge database of wireless access points, or if there are other methods that can do this.