How does visitor location work?

How does Piwik find out where visitors are coming from? Since multiple IPs on my installation are showing up as based in the US whilst IP lookup sites says the UK.

http://whatismyipaddress.com/ip/81.149.67.54

This IP shows up as being in the US when it’s actually in the UK. I’m 99.999999999999% the IP is in the UK since the ISP only provide services in the UK.

Any way I can resolve this problem?

http://piwik.org/faq/troubleshooting/#faq_65

Good, doesn’t track the IP’s…