Local results means that if I search for "driving laws", Google gives me .gov sites for my state as the top results, while Kagi's first page gives me results for 8 other states (including Alaska!) but not for my state.
There are a lot of kinds of queries that benefit from knowing the user's location even though they aren't actually looking for a place that exists on a map.
(I'm a happy paying Kagi user, but OP is right that this is its weakest point by far.)
It's not terrible—as I said, I'm a happy customer—but it's not a habit I have and it feels like something that should be configurable once in a settings menu. I don't even really want to have it detect my location live, I just want to be able to tell it where I live and have it prioritize content that's local when given the chance.
Do you actually find that attaching your location to the end of the query doesn't work? I don't do it naturally, but when I do do it I'm rarely disappointed.
So that is a solid advantage that Google is going to have, but the maps business alone wouldn't be able to keep it in the S&P list for long.
The chatgpt approach to search just feels forced and not as intuitive.