That app is a free alternative to Googles Location Service.
If you never installed it but you have Google’s Anti-Services installed then F-Droid will confuse the two apps because they have the same package name.
You can just ignore the update if you want to stay with google.
Here you can find out more about the app.
The GAPPS devices version can also be installed alongside Google but nobody has confirmed that it works on the Fairphone yet.