The game is still in beta, and since it requires an Android phone to play (and those haven't actually come out yet), it's really more of just an idea at this point. But yes, the plan is to use GPS to let players "mine resources, build buildings, craft items, trade goods, meet people, start kingdoms, lead wars, and explore the world." As you can see in the demo video above, various virtual resources will be hidden at real world GPS points, and odds are that you'll have to visit those points in real-life to perform activities and play the game.
An interesting idea, anyway. It's hard to picture an ongoing game based around actual travel to real-world locations (although geocaching seems to pull it off pretty well), so it'll be interesting to see what these folks come up with.