From my understanding, apps need location permissions if they want to scan for available bluetooth devices rather than having the user pair in the bluetooth settings app. The reason being that advertisers set up bluetooth beacons all over the place and used passive scanning in apps to collect the users location.

What's not clear to me is why they really need to be able to scan for bluetooth. Surely requesting location permissions is worse UX than having the user go to the settings app to pair.

yeah that's not good! That's why I don't want to buy a "smart" fridge or any of these appliances that require Wifi access.