That is an excellent point!
That is why we have the IP to country level data available for free. As you have recognized the fact that country level data is good for security, we are willing to take a massive hit on potential revenue to allow everyone to use our country level data for free, even for commercial purposes. We literally built separate dedicated infrastructure that provides unlimited queries for our IP to Country data. We want to ensure that everyone has access to reliable data.
For us, based on active measurements, what we do is distribute IP addresses to more densely populated areas. The issue is that we are good at zip code level accuracy, but it is impossible for us to get street addresses correct for residential internet connections. Even if we get geographic coordinates fairly close to you, it is largely coincidental. Our accuracy radius goes as low as 5 KM.
However, consider hotels, conference centers, airports, train stations, etc., where large numbers of people gather and where there are a few public WiFi hotspots that usually remain in the same location. We can identify the exact building from those WiFi hotspot IP addresses.
We have approximately 1,200 servers in operation. Simply by knowing which data centers house our servers, we can reliably identify neighboring hosting IP addresses to the exact data center.