That how lineage ships by default. It's a bit of a pain and many other apps (even open source ones) won't work, since google is providing the library for those apps to do things like access your location.
I'm able to access my location no sweat. The proprietary google track-and-upload-everywhere-you-go thing is an anti-feature, GPS alone works perfectly for me.
Programs that require Google Services just plain suck. That's like a game that only runs if you have a mouse from Logitech or a document viewer that only supports printinf if you have a HP printer. Both would just suck and be shitty, borderline malicious programs.
I don't know if that's a fair comparison since Google Services are running on the vast majority of Android devices (except in China) but Logitech or HP don't have that same market share for those respective products.
I get that it's annoying if you choose not to run Google Services. But from a developer perspective if 99.9% of their target market does run Google Services and they make development of the app easier or provide useful features, I can see why they would choose to rely on them.
The way they've done this basically has users begging for it though because the alternative would likely be excessive battery usage for some things and no updates for others. I'm on lineage but most people aren't fortunate enough to have nexus devices or don't know/care enough to run anything other than what comes with their device. I think moving everything possible to play services is helpful for them.
If it was about the features, they could (and should) have released these bits as part of AOSP, as free software.
Not doing so reveals there actual reason: control. Forcing every manufacturer to ship Play Services and thus being able to force various things on their devices is a major financial benefit. It also ensured that Amazon or Nokia were unable to set up a commercially viable Android Fork without Google.