Craig Federighi, on the most recent episode of The Talk Show with John Gruber [0] about 47 minutes into the episode, talked about this and I think both your assumptions are correct. For the first one I'm sure they didn't want to deal with the complexity of picking an exit location nor did they want to be a party to getting around geo-locking and so this gave them the best of both worlds, no UI and no issue with geo-blocking. For the second point I think that is also the reason as well as it's often helpful if a website knows your general location (For relevant recommendations, CDN routing, etc) but we'd prefer if the website didn't know exactly where we are coming from (IP-wise) which can be used for tracking/ads.

[0] https://daringfireball.net/thetalkshow/2021/06/11/ep-316