The app doesn't seem to eat up much space (it occupies 4MB on the device), so it appears to be pulling map data OTA. That's a good thing if you're worried about filling up your G1, but bad if you need info quickly or you're not in a data-gettin' spot.
ENGADGET: An Engadget adventure with TeleNav's G1 GPS software: hands-on, impressions, and video