I have very rarely, if at all, filled out the location field just because I don't want people to know specifics about where I live. I think that will let youtube focus on the country the video was filmed in and allow more people in that specific country to find it.
I use the location field, but for very specific purposes. I do a fishing vlog based around Padre Island, Texas. This is a popular tourist destination, so the traffic that I target are families with a dad who is going to want to do a little fishing when he brings his wife/kids on vacation to the beach. As such I use the location tag to rank in search for several of the more popular destinations in our area.
I think the location field is best used for events, like if you're doing a vlog at VidCon after the fact. I don't think they use gps locations, but rather, locations you you supply. Mine is all drawing so I've never seen the need to use it, but if you go to events, festivals, hikes etc, like Stanley said, it could be good.
I've also been wondering if my videos will be viewed more in that area if I was to put my location however I'd rather keep my channel quiet from people in my area until I have a decent amount of videos. I want to get used to uploading and make sure I'm 100% comfortable before people that I know from my area find my channel haha