This question is more or less radionetwork based questions, so you are dealing with real mobile network issues. CID (Cell ID or COO, Cell Of Origin) is the identification code to Cell. For example GSM-network has BSS (Base Station Subsystem), which includes BTS (Base Tranceiver Station or Base Station). Each of those Base Stations can "listen" mobile phones (MS, Mobile Station), which are in range (quite near, like 100m - 30 km). This "range" is called Cell. Each Cell has Cell ID, which identifies the Cell.
Your mobile phone can be inside several Cells for example when you are inside urban areas. Network makes decision, which Base Station is used to handling your phone calls. LAC is Local Area Code, which includes also to handling terminal location information.
Where ever you are going, your terminal (mobile phone) "talks" with network all the time. Network basically knows all the time your MMC (Mobile Country Code), MNC (Mobile Network Code), LAC (Location Area Code) and the Cell you are in (Cell ID). Some of the location based services are based on Cell ID information.
Yes, You can use for example Cell ID to identify your location. In city area, the cell range might be about 500m x 500m area (depending of buildings, and in country side this might be about 10-20 km. You can. Using standardized ways, like triangulation.... basically you gather distance-information from at least three base station and calculate it, you can get quite accurate results.
Operators has normally this Cell ID-information, which they are not giving away very easily. Collecting own "coverage map" is painfull, because operator can change CellID's as well as network. Pain continues, if there are several operators in same area like usually is.
There are several good books available. More good information is available from:
Good slideset from GSM Architecture:
Good information from Location based sservices:
Hanttila / Forum Nokia
PS: Sorry for delay with answers. I hope these links can help you :-)