Android requires apps request location permissions in order to access Wi-Fi IP info.

Aren’t they able to get the ip just by connecting to any server?

Yes, although they won't get the whole Wi-Fi scan list, which means no fine grained triangulation, and also no BSSID, but it's definitely imperfect.

It's also very frustrating if you are using the Wi-Fi APIs for legitimate purposes. Having to explain to a user why you need location permissions in order to set up a Wi-Fi peripheral isn't easy.

That doesn't matter at all if your request is being location stamped because it came from a Starbucks / your home WiFi IP.

By introducing VPN I guess (I think Google offers one on their Fi service) - I don't seen any other solution, especially since telcos sell your data as well.

It's just worth noting that flipping a switch in your OS might not do much in terms of location tracking.

And then unless you are hosting your own VPN, you have no way of knowing whether your VPN provider is selling your data...