It will return listings in the database after it calculates the search area around the request.
1. Visitor searches for “My city”
2. Google figures out the lat and lng of “My city”
3. GD then searches the database of any relevant listings in the database within that radius, and serves them on the search page.
This system is actually better than only searching for locations in the database.
1. Imagine you have listings in “My city”.
2. You do not have “City-next-door” in your database.
3. If the search would only use the database, you would have zero results, when somebody searches near “City-next-door”.
4. But the Google API will send the coordinates of “City-next-door” to GD, and if the listings in “My city” are within the search radius, you will still have search results.
Hope I made sense.