Locations of your recipients are based on the IP-address of the recipient.
To determine what IP-address is associated to which location, we use a service that automatically gives us this information. That service gets their data directly from ISPs and their data gets updated regularly. This way we can provide a fairly accurate visualization in your analytics dashboard.
However, there are some exceptions. If the recipients of the tracking pixel uses a VPN or their e-mail service uses a proxy, then the true location data of that recipient won't be tracked.
Instead, the location data of the IP-address of that proxy will be tracked. This frequently happens when sending tracking pixels to Gmail users, then the IP-address of the GoogleImageProxy will be tracked (which usually resolves to the United States). You can read more about this in What is GoogleImageProxy?.