Craigslist has server specific locations. I am not familiar with how Facebook market works, but even ebay has country specific servers, which in Europe often means very location specific due to small countries.
Obviously the actual physical location of the server doesn't matter. When you set up a Flohmarkt instance you can freely chose a location, the city you plan to advertise your market in for example, and then also specify a circular distance of how far to federate with other Flohmarkt instances, for example to also federate adverts from neighboring cities.
You can chose your geographic location by chosing the instance that covers the geographic location you are interested in, just like you chose the location of the server in Craigslist.
Obviously the server is on the internet an can be physically hosted where ever ๐