The 123SmartBMS has Bluetooth Low Energy. To get a list of devices nearby, the app asks Android to scan for Bluetooth Low Energy devices. Android only starts scanning for these devices if location permission is turned on. Otherwise, the app will get an empty list.
When you turn the location permission on, the app will get a list of BLE devices that are close enough, like 123SmartBMS.
The app does not use or store the location in any way.