Comment by Matheus28
They could get a rough estimate of an IP location using traceroute from many different known locations. Very rough but it’s a starting point.
For some cases, they might just lookup who owns that IP range and put their address as the IP location.
Yes traceroute is something where approximate rough estimate where IP perhaps could be as up to ISP level hosting it, but traceorgute isn't usually allowed pass firewalls and seldom reaches target IP on networks where clients really are.
One possibility is BGP advertised and known information like https://www.cidr-report.org provides could be used. But like I wrote commercial GeoIP data providers are not allowed to use WHOIS information from RIR registries. It's their ToS generally prevent it being collected and resold why MaxMind told me that they don't use it.
Thus the LOC information I had updated RIPE DB in our records LOC or any other information there were not used by MaxMind. Or at least that's what they claim. True or not I don't know, but that's what they tell if you ask from them.
Also apparently they did not use LOC records from the organization domain I maintained DNS LOC records either. And I got no answer why nor what they use as their sources of information. As it's more likely some kind of trade secret of them.