You can. iOS apps have to request individual permissions - I'm not sure about the specific level of granularity here, but you can deny location access while still letting the rest of the app run, and the app has to be able to deal with it.
No, you can reject permissions, but not entitlements.
Entitlements are granted (statically, per developer certificate or maybe app ID, not sure) by Apple, permissions are (optionally) granted by users at runtime.
The only way to not have an app making use of an API gated by (only) an entitlement is to never install it.
Of course there could be permissions that are gated behind entitlements, but in this case it seems to be only an entitlement.
And even then, an app can block usage until you allow a permission; ie Snapchat doesn’t need the camera permission to allow you to chat but will block usage of the app until you enable it.
It's not a new idea but I would love to see Apple implement a way to serve eg. a fake, empty contact list for an app that refuses to enable a feature unless you allow contact list permissions.
I personally use several different terminal/Unix emulator/SSH client apps on iOS that request the "background location" permission solely because there is no actual "background execution" API.
That's a design decision. Apple doesn't trust developers in general not to abuse this background API. They expect lots of aid requesting it, unknowledgeable users granting it without thinking much, and iPhones getting a crappy reputation for battery performance as a result.
I dislike this decision (taking a choice away from the user) but from a business point of view it makes sense.
