I can def see detective Jonhson trying to find child pornographer X with a warrant to get their location based on an ip. The company doing the geolocation might or might not tell them: this is the gps coords, but with an error of a few thousand kms.
Now, if the Arnold's ever want to do something "bad", their situation could've been the perfect cover up :-)
Well if we're talking about safe expectations... there are no expectations. Pretty sure it'd not even get the planet right for browsers from the international space station, or the continent if your IP is newly registered (e.g. IPv6, but even for IPv4 this still happens).
Cities, in my experience, are often correct and are usually the closest you get.
In reality, it should probably return a shape file of some sort.