You're describing GeoIP derived from "public" information sources such as the physical address of the assigned entity or the location information provided to the registrar by the block owner.
However, there is a different kind of GeoIP that has the potential to be much more specific as to the location, based on a join between Internet traffic and transactions that target a specific location. e.g. when you purchase a physical item from an online vendor, with your house as the delivery address, they now have both your IP and location. Obviously for this to work it depends on a) the IP address remaining the same for some period of time and b) sharing of the necessary information to allow the join. afaik both are often true.