What it means
An app's data-sharing label states how its developer says it handles information. Android's location permission controls whether the app may request location from the device, while Privacy Dashboard shows recent permission use. One screen cannot independently verify the other.
A real-world example
A travel app announces a new marketing purpose for location. The user finds it has all-the-time permission even though navigation works only while the app is open, so they narrow it.
What to do
Read the stated change, inspect the permission mode and recent use, then choose a mode matching the feature you actually need.
The distinction that matters
A label is not a live packet capture or proof of every past transfer. Google notes some stores and preinstalled apps may not supply the same data-safety labels, so absence of an update should not end an audit. Ask the provider about data already collected if that matters.
Google's location sharing explanation