It may be useful for local payment platforms e.g. if you started this in China you might advertise it so that users can easily pay using AliPay. Perhaps it's a business or regulatory issue - presumably the website takes a cut of the payment and working only in your home currency simplifies that.

Other issues are that you can easily deal with support requests in your own language and timezone (and cultural effects matter a lot too). If you live in India and deal only with Indians then you can respond to problems immediately. If all your jobs are in the US and all your freelancers are in India then you have a disparity there.

The simple answer to your question is that for the freelancer it doesn't, but for the platform it may simplify things a lot to keep it local. In fact at a hyperlocal level (say a mid size town) there may even be a more lucrative market than going global because your USP is specifically connecting devs and companies in the same place.

Personally when I'm looking to work with someone.. I always prefer someone closer to me. meeting once a week or even once a month to discuss the project is better than not meeting at all

Yeah, aside from: Developers in that part of the world often work for less than the federal minimum wage of the United States and you'd want to exploit them for profit.