Why does camera want to know my location?

Many applications that utilize the camera may also offer location-based features. For instance, video conferencing apps might use your location to optimize connection quality by connecting you to the nearest server.

If you are concerned about privacy, you can manage the Camera app's access to your location through the Privacy settings in Windows 11.

Follow this official guide to manage Camera settings:
https://support.microsoft.com/en-us/windows/manage-cameras-with-camera-settings-in-windows-11-97997ed5-bb98-47b6-a13d-964106997757

Some apps may rely on location services for better experience. You can read out privacy policy for such apps, those are requesting your location.

You should only grant this permission to built-in or well-know apps. Location is the sensitive information you should never share with unknown parties.

Maybe because as a system app it has it by default. But i don't think it uses it in the background. You can always tap the notification and disable it when the app isn't used.

It’s optional and use for better quality experience and location tags in your pictures which you taken

No harm done, you can ignore it.

When location services are turned on, the camera can use GPS, Wi-Fi, Bluetooth, and cellular data to determine the location of photos and videos. This metadata can be embedded into the photos and videos, allowing you to search for them by location or view them in the Places album.