Earlier quoted context omitted.
It’s called dynamic ad insertion. Online radio stations use it all the time for localized ads based on IP address. Did some work for a set of radio stations in the way of building a diagnostic web player for the metadata in HLS streams debugging their new ad system. (Using HLS.js which I have to say I’m grateful for as it’s a brilliant library) So they don’t have to stitch together one new audio file per local but pl…
No HLS in podcasting because of its legacy but just-in-time building of audio files with some caching is plenty fast. Some folks who do this use old internet radio streaming technology with the max buffer size set to infinity, but most of the time it's operating with plain old mp3s.
But I’m sure independents/lower-volume shows at the very least operate like you’ve said. Makes sense.