1) Even if you disable location access to iOS system services, you cannot get your location without also sending that location to Apple. https://www.apple.com/legal/privacy/data/en/location-service...

2) You're right. It looks like it's possible to set up an iOS device without an Apple ID, but you obviously won't be able to install any apps. I couldn't find a list of what does work if you don't enter an Apple ID during setup.