My guess..
If you want to extract (isolate in msg.payload) the lat and lon values, without any change on the function node you have shown, then it could work adding these two function nodes (or eventually a change node) with the code:
msg.payload = msg.payload.position.context.lat;
return msg;
msg.payload = msg.payload.position.context.lng;
return msg;
It is always useful to check the debug panel to get the path of the property in the msg object. This is the value you got when you click the small icon >_

Testing flow:
[{"id":"125c4ac9.259475","type":"function","z":"8adada5a.8de1e8","name":"Extract Lat","func":"msg.payload = msg.payload.lat;\nreturn msg;","outputs":1,"noerr":0,"x":503.75,"y":245,"wires":[["63840b29.b23a34"]]},{"id":"4c0af6fa.939498","type":"function","z":"8adada5a.8de1e8","name":"Extract Long","func":"msg.payload = msg.payload.lon;\nreturn msg;","outputs":1,"noerr":0,"x":503.75,"y":285,"wires":[["63840b29.b23a34"]]},{"id":"63840b29.b23a34","type":"function","z":"8adada5a.8de1e8","name":"create_payload","func":"var lat = \"34.736729\";\nvar lng = \"-92.34977\";\nvar device_name = \"gps\";\nvar token = \"mysecrettoken\";\n\nvar payload = {};\n\npayload[\"position\"] = {\"value\": \"1\", \"context\": {\"lat\": lat, \"lng\": lng}};\nmsg.payload = payload;\nreturn msg;\n\n","outputs":1,"noerr":0,"x":713.75,"y":265,"wires":[["7846bf6d.3ee8b","ba86eced.1240d"]]},{"id":"862dc1af.b9929","type":"debug","z":"8adada5a.8de1e8","name":"","active":true,"tosidebar":true,"console":false,"tostatus":false,"complete":"true","x":1050.1251411437988,"y":270.000036239624,"wires":[]},{"id":"606b5806.9a1be8","type":"inject","z":"8adada5a.8de1e8","name":"","topic":"","payload":"","payloadType":"date","repeat":"","crontab":"","once":false,"onceDelay":0.1,"x":242.62500762939453,"y":256.25,"wires":[["125c4ac9.259475","4c0af6fa.939498"]]},{"id":"7846bf6d.3ee8b","type":"function","z":"8adada5a.8de1e8","name":"","func":"msg.payload = msg.payload.position.context.lat;\nreturn msg;\n\n","outputs":1,"noerr":0,"x":887.6251373291016,"y":268.7500114440918,"wires":[["862dc1af.b9929"]]},{"id":"ba86eced.1240d","type":"function","z":"8adada5a.8de1e8","name":"","func":"msg.payload = msg.payload.position.context.lng;\nreturn msg;","outputs":1,"noerr":0,"x":890,"y":316.25,"wires":[["896c897f.e089e8"]]},{"id":"896c897f.e089e8","type":"debug","z":"8adada5a.8de1e8","name":"","active":true,"tosidebar":true,"console":false,"tostatus":false,"complete":"true","x":1050,"y":320,"wires":[]}]