One of the benefits of Cloud Computing that makes Clouds "Cloudy" is the location independence of its resources. When you provision a Cloud instance, you need not know or care where that instance is physically located -- what server, rack, data center, or even necessarily what country.
The downside of such location independence, of course, is that sometimes you really do care where your instances are physically located -- in particular, when there is a law or regulation that requires such knowledge. You may need to locate your data in the same country you reside in, or there may be laws that limit transmission of certain data across national boundaries.
To respond to such requirements, Cloud Service Providers (CSPs) are offering geolocation in the Cloud: the ability to identify and specify the physical location of your Cloud resources. Fair enough, if we must comply with a regulation, then so be it. But aren't we defeating one of the primary benefits of moving to the Cloud in the first place?
The answer: it depends. Physical resources have fixed locations, but virtual resources do not. If you throw in the towel on geolocation and treat Cloud resources like physical resources, then you've given up much of the flexibility the Cloud promises. On the other hand, if you treat the physical location of virtual resources as a matter of policy, where you manage and enforce such policies as part of an automated governance framework, then setting the geolocation of your instances is a simple matter of configuration.
There's more to making this automated governance work than meets the eye. The Cloud consumer may simply configure their instances to follow a policy like "put a copy of my data in Texas and New York," and then change the policy to add California to the mix, and they're done. But behind the scenes, the CSP must provision the appropriate instances in their California data center, migrate the appropriate data (or entire workloads) to it, and then follow appropriate policies about keeping your data in synch. And they have to automate the whole shebang. Can your CSP do all that?