No joke. When my brother uses Uber on the south end of Mercer Island, it regularly shows the "closest" car as being in Seward Park - about 1/2 mile away across a lake. The bridge of course is far north, and pretty much every Uber in Seattle's downtown or centrally-located neighborhoods is significantly closer than the one Uber picks.

Seems like they are simply using as-the-crow-flies distance, which is kinda crazy.