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Location coordinates are required for the distance search (radius search) feature and an ability to zoom and reposition the map automatically when you select the location in the cascading dropdown field when adding listings so it is easier for the user to pick their exact location on the map.

If you select the location to search you get all listings that belong to that exact location, but if you select the radius you get all listings that appear in a definite radius around the selected location. For example, if you select USA -> New York -> New York, you get all  listings that have that exact location selected, but if you set the search radius to 75 miles you will also receive a list of listings that are in Long Island that is 50 miles away.