iPhone Tracker scans through the backup files that are automatically made, looking for the hidden file containing your location. This database of your locations is stored on your iPhone as well as in any of the automatic backups that are made when you sync it with iTunes. If the program finds this file, it will then display the location history on the map. The hidden file Apple uses to track your location is stored in a folder inside /Users/<your user name>/Library/Application Support/MobileSync/Backups/.

Once iPhone Tracker finds the hidden file you can expect it to open a new browser window where a map will show with points the different locations you have visited since updating to iOS 4.

iPhone Tracker doesn't record anything itself, it only displays files that are already hidden on your computer.