The core functionality remains the same. Google Maps uses GPS to get a basic idea of your position, and then relies on the camera to get a much more accurate position with 3D arrows that are over where you need to turn. However, Google does not want you to rely too heavily on AR to get around. If you hold the phone in AR mode too long, and not only will you be disturbed while lowering the unit, but the screen will eventually darken to force a change. This is both for safety's sake (Google would rather not have people, as well) to save battery power and data.
AR technology will not really replace conventional navigation, at least not without glass wearables. However, in such situations, it may be helpful if you are dealing with a complex intersection or otherwise misorienting. It could also help in moments when the GPS is less accurate, especially in larger cities where tall buildings could interfere with satellite signals.