Over the long term, history demonstrates it to be markedly inaccurate and unreliable.
IP addresses, postcodes, and the like, were not invented to directly encode geographical locations. That is, simply, not their purpose. IP addresses are used for routing network traffic around Internet, and postcodes are used by postal services to route mail through a postal system. They are designed for those purposes. The "locations" that they do encode are locations in the topographies of Internet network connections and of postal system sorting and delivery systems, which are often very different to actual geography. Any correspondence that they might have to actual geographical locations should be considered fortunate, and unreliable. Don't expect postcodes to always work in navigation systems. Don't expect your computer's IP address(es) to identify what country, or even what continent, you are in. They weren't designed for that purpose, aren't maintained and updated for that purpose, and often produce highly erroneous results when (mis-)used for that purpose.