The default selection is the ByLocation group type. If you want to use the ByLocation group type for determining how end user components are tracked and reported, then ensure that the groups of that group type associate IP addresses with the locations you want to track.
If you have a large network, it may be desirable to track and report end users by region, rather than by individual location. In this case, you may prefer to create a ByRegion group type for managing services. In this new group type you might define regional groups instead of using smaller geographical locations.
The group type selection you make on the Configuration > General Settings page is applied to all service definitions. It determines how end-user service components are grouped on dashboards and reports. You should choose this group type carefully because historical data for services will be lost if you must change the group type later.