I have not an "answer" but I have an experience with tampering with this as I live on a very small island (a sovereign part of Finland) and I thought my location would impact my search results. I asked Etsy about this and they said it would not impact my chances of being found. I changed to the nearest city in Finland just to try. I did not see any drastic changes in traffic. But, Finland is not using Etsy that much so the trial had its flaws. Try to send Etsy a question and see what they say about your location and shop.