Location Guard needs to be able to modify the javascript geolocation API for any webpage. There is no way to do so other than using the generic permission to "Access your data for all websites".
This does not mean that Location Guard reads your data. The extension is open source and reviewed by Mozilla, any malicious behaviour would be easily detected.
Note that the "Access your data for all websites" is standard for most addons, it's hard to do anything without it. Ghostery, for instance, is one of the most well known addons for privacy and does use it. Same for uBlock, AdBlock Plus, etc.
