I do think there are advantages to being honest about your general location, depending on what type of chat room you want to run. In the case of a social site like CB or MFC, I think those advantages are significant for exactly the reason you discuss it makes the model seem more genuine and approachable. Which can lead to larger tips. Now if all I wanted to do on MFC, is see girls get naked and fuck themselves, then yes the locations is irrelevant. But if you are interested in conversation deeper than show bobs bb, or what size are they, or do you do anal, then answering a question where do live, with something like near LA, Chicago, or Kansas, Eastern Mexico is much than "I live on the internet."
I reject that the only reason a member wants to know a models location is because they want to meet/stalk you. When I meet somebody IRL, and to lesser extent online, one of the first 10 questions, I ask or get asked is "Where do you live?",Where are you from?. It is a very handy piece of information to know as a conversation starter. If you know where somebody lives you can talk about the area, the local sports team, the food, the weather, or even the politics.
Now I certainly get why if you live in small town why you would want to keep that information private.
But as a camgirl husband told me: pretty attractive woman are going to attract unwanted male attention, in some cases it rises to the level of being stalked. But it is a hell of a lot more likely you are going to be stalked by the guy you meet at a bar, grocery store, gym, or see every day at Starbucks, than the dude who lives a 1,000 miles away and pervs on dozen other models.