The GPS receiver on the Phantom reports it's location to the app via the wifi connection.
The radar indicator shows that position relative to the recorded home position or relative to your phone's current GPS location.
The last location it reported to the app may not be it's current location.
If the Phantom loses GPS lock, the app will have the last location it reported. It may drift with the wind after that. Even if you still have the WiFi link, the location will not update if it doesn't have GPS lock.
If the app loses the wifi connection, it will have the last location it reported. As long as the Phantom has GPS lock, It should hover in place there and may still respond to control input even if you can't see it. It should eventually return home or land there when the battery is drained.
If you get close enough after a crash or loss to reestablish the wifi connection, soon enough that there is still enough battery power left to keep the Phantom on, and assuming it came to rest where it has a good enough view of the sky to get or keep a GPS lock, you might get an updated location to help you find it.
If not, you'll have to make due with the last reported position and hope you're close enough to find it with your eyes.