You can choose in the OS to use a general location or stick to something in your proximity.
At least in the Developer Beta 2
At least in the Developer Beta 2
There are clearly some bugs. Occasionally I, in Canada, get routed through the US. This guy got routed through the US. Neither case should happen by Apple's description. Apple is quite intentionally trying to avoid their relays getting around geo-restrictions (likely to avoid them getting blacklisted).