Mrs D is partially sighted, and by coincidence one of my neighbours breeds guide dogs for the RNIB.
We have my boy Lemmy, but since the superb eye and neurology experts at the NHS were able to salvage almost the complete sight in one eye we've kept his as a pet and companion dog. I've no qualms about that and not passing him to a new owner, as I'd paid for him and trained him. 4 years on after being prematurely 'retired'he yanks my arms out their sockets when I walk him, but put hum in harness and send him out with Mrs D and he's all business.
As for my neighbour, they do labs and shepherds. Both are intelligent, with the most useful combination of performance from their senses. Bred properly they have a long working life, are robust, and as free from inherent defects and diseases as it's possible to get.
The RNIB aren't above breeding 'mongrels', but its carefully controlled using good breeding stock. Mixes of lab, german shepherd and retriever are favoured. My neighbours specialises in shepherds of late and has bred some fantastic, intelligent and docile animals, but his most recent litter was a shepherd-retriever mix. The puppies were absolutely gorgeous, and I was frisked upon my leaving to ensure I hadn't snuck one out
Any dog above a certain size has the potential to be suitable as a guide dog, but certain breeds and combinations have not only the greatest chance of success, but are the most effective, and the RNIB breeders play the best cards in the deck.
As for the thread title, the human knows where they're going, not the dog, although if the daily routine is rigid the dog will know that the 11am journey is the bookies, 1230hrs the pub, 1500hrs the pie shop, etc.
As for stairs, we live in a bungalow because of Mrs D's mobility issues. As such my boy Lemmy rarely sees stairs, so when we visit a house that does have them he's up and down them like a loon.