[1] Without a heat sink at an ambient temperature at 50 °C, a maximum power dissipation of (TJ-TA)/RθJA = ((125-50)/80) = 0.98 W can be permitted.
For a constant current mode with an input voltage source at VIN at 12 V and a forward voltage drop of VF=3.6 V, the maximum output current will be PMAX / (VIN - VF) = 0.98 / (12-3.6) = 117 mA.
A LM317 commonly requires a heat sink to prevent the operating temperature from rising too high.
For large voltage differences, the power lost as heat can ultimately be greater than that provided to the circuit.
This is the tradeoff for using linear regulators, which are a simple way to provide a stable voltage with few additional components.
Because some quiescent current flows from the adjustment pin of the device, an error term is added: To make the output more stable, the device is designed to keep the quiescent current at or below 100 μA, making it possible to ignore the error term in nearly all practical cases.
The output current is that resulting from dropping the reference voltage across the resistor.