Your community's location is used for addresses within your community, which only need to have a street address and (optionally) a unit number provided. The remaining information (like city, state, and ZIP code) will be pulled from your community's location.
The location will also be used to determine country-specific configurations, like what information needs to be collected for addresses, how to format those addresses, proper naming of certain fields, and more.
Finally, the location is used to display weather on the homepage and is used in the website's search engine title.
How to update the location
This may be updated from the "Settings" section of the the Admin Control Panel. In this section, click on the "Community" tab, and then the "Location" tab as shown below.