How does find my iPhone work?

I have find my iPhone on my sons phone. No, I do not invade his privacy, I'm setting it up just in case of an emergency. When I'm on the app it shows his iPhone and under it it has a green dot and says "now" does this just mean he's on his phone at the moment or does it just mean his location services are on?

That shows his current location.

If it says "now, it means the phone has an internet connection so it's location can be fetched at that instant.
(Either via Wi-Fi or by mobile data - 3g / 4g etc).

If you don't get that, it is either switched off or in an area with a poor phone signal or no mobile data.

Don't forget to set "restrictions" with a passcode, so someone can't just turn off location / find etc. If it is stolen…