Great question! Could just be Real-Time Kinematic (RTK) GPS like someone mentioned. Essentially the landing arms know their position very precisely and they measure the tiny errors in GPS data, and send that correction data live to the rocket in real-time as it's landing. Once the rocket gets very very close it could also just be using vision systems to zero-in on exactly where the chopsticks are.

To speculate more, they could also be using something like ultra-wide band positioning. This relies on the same time-of-flight principle as GPS but instead of using satellites in orbit to provide the precise time information you rely on various nearby ground stations. Would only be useful right at the final approach, the last couple hundred meters, but it's another way they could get very very precise position information. (fun fact: Ultra Wide band positioning is also how iPhones can locate AirTags with centimeter accuracy)