I think the current system prompt includes something that tells the model the user's current location and time zone based on the user's IP address.
While I agree that some questions need to consider the user's location (e.g., "What's the weather?", "Tell me news near me"), Kagi has just over 50,000 users. If a user is in a small city or town, there might be a risk that the upstream provider could figure out who they are.
(Also some OpenAI models have potential long-term logging issues because of lawsuits.)

I think an optional "disable location sharing" setting would be helpful for some people (for example via slash commands which are currently WIP).