Its not super precise. Its really where the IP address of the ISP provider is located. So in my case, it shows a map of the broad area on the authenticator app that is really hundreds of miles square. The non-interactive sign-ins would most likely show more as the requesting app rather then the actual sign in logs which should be in the IP address of the user.
If that link you referenced: https://support.microsoft.com/en-us/account-billing/common-questions-about-the-microsoft-authenticator-app-12d283d1-bcef-4875-9ae5-ac360e2945dd
says they don't store the actual coordinates, then you can rest assure they don't. Microsoft has nothing to gain by lying about that :)