While GeoIP databases might be more accurate this method may in some situations provide location information of users behind proxies. lame self-reference, discussion on the topic: https://deadhacker.com/2011/03/13/predicting-location-of-one...
Sort of. You measure the latency from the user to the proxy + the proxy to the site, so what you end up with is the approximate location of the proxy and a radius around it where the user could be. But the radius is liable to be 3000 miles, and you can't even assume the user isn't really closer to the proxy than that because the user could be using more than one proxy or anything else that adds fixed network latency…
But I also assumed an investigative organization that took the idea further would use the latency information with a map of latencies between major internet exchanges. This would increase accuracy and usefulness, though still the entire idea only works to provide indefinite clues