Yep, the website checks your Internet Protocol (IP) address and tries to
figure out your computer's general location from that information.
This ISAPILabs web page discusses this topic within the idea of "Putting
Geographic Information To Work For You."
"Each time a user visits your web site, their internet address or IP
address is tracked. Whenever a user anywhere connects to the Internet
they are assigned an IP address by their internet service provider (ISP).
This IP address is a number tells other computers on the internet how to
route data to you. The service provider has the ability to assign users
IP addresses because they themselves have been assigned a range of IP
addresses that they can use by certain regional organizations."
This method has limitations, as my IP address indicates I am somewhere in
California, where my ISP NOC (Internet Service Provider Network Operations
Center) is based, instead of Colorado, where I am actually located.
The Geobytes website has a nice "IP Address Locator Tool" page.
"This IP Address Map lookup service is provided for FREE ... to assist you
in locating the geographical location of an IP Address."
If you accept cookies and you input your zip code, etc. into a website,
that website could set a cookie on your side that could be used to pull
up a map of your location, etc. as well.
If you need any clarification, please feel free to ask.
Search strategy: Personal experience of past operations of an ISP.
Google search on: "user's location" website
Looking Forward, denco-ga - Google Answers Researcher