the answer is yes, unless you're on GrapheneOS. Google Services is a privileged app and therefore it can bypass permissions as it sees fit.
GrapheneOS (optionally) installs it as a unprivileged app, which you can restrict permissions to. Still, I wouldn't recommend installing it since they have extensive telemetry.
I wouldn't be so sure about the possibility of a bypass. I've heard that system applications have more privileges, but sandboxing is still active and permissions work for them.
You can't disable location permission for google services, so that's obvious. But microphone/camera permissions can be disabled, that's why I'm wondering.
I'm rooted with GSF, revoking some permissions forcibly from Play Services (most notably location access) causes the device to reboot, and the permission gets restored forcibly.
This never used to happen previously (the permission used to get revoked successfully, and things like Google Timeline would act as if your device had disappeared despite location being enabled). I assume a background update implemented this permission recovery mechanism - i've since disabled play store on my device and slowly been culling off my usage of other Google apps
There really should be no doubt that a system application can have unlimited and unrestricted access to everything, bypassing all security and sand boxing. That is the extent of the meaning of system app. It's like having root privileges, admin access.
Whether Google makes use of it or not is something else, but it could be exploiting that privilege and with Google's history and the fact that the distributed version of android which contains the google services pre installed is a custom version of android of which you'll never see the source code, you really have to ask yourself.
That's why GrapheneOS is so important: you are the user and you get to control how Android works: the way it actually should, where if you install google services (which is up to you!) it gets installed under your terms and with your permissions.
It absolutely can. It took a screenshot of what I was doing without my permission. Only reason why I found out was cause it for a survey they were doing. So I wouldn't be surprised if they're doing it all the time without me knowing.
No, they meant that Google Play Services has telemetry.
Basically, GrapheneOS makes it much safer to use Google Play Services if you have to use it, though it still isn't entirely safe and should generally be avoided where possible.