That app was built by a UW student and uses estimated data based on the schedule, as far as I know. It's not accurate... unless things have changed in the last year or so since I moved.
It's always been real-time location data. At one point it was pretty low-tech (odometer hooked up to a radio transmitter) but it's now been GPS-based for ~5 years.
I last used it about 4 or so years ago, so of course things may have changed. It was appallingly bad though, to the point where it was no more accurate than posted schedules on the routes I rode. I just quit using it because it was so thoroughly useless. The sad thing is that it previously had worked extremely well. Glad to hear they've fixed the issues.