It works for your actual location and has a movement sensor to rotate the sky view sideways and vertically to display the sky you are actually looking at. It uses the GPS, digital compass as well as accelerometer.
The application is called Pocket Universe - see www.tuaw.com/2009/05/14/the-universe-in-your-pocket/ or at www.macworld.com/appguide/app.html?id=67054 for more details.