How does GeoLocation service providers works?
we are working with a company that provides us a binary file monthly and we can query the file by ip address and it returns the Location of it (Country, Region,City, PostalCode,...).
How do they gather this information?
Interesting point is that, they dont have information for some countries. Like mine :)
IP geolocation uses data from internet services providers, such as WHOIS information, traceroutes, hostnames and other data gathered via public sources. It can be incredibly inaccurate because every ISP structures their network differently.
There's also browser-based geolocation, which uses information about nearby wi-fi access points, or in the case of mobile devices, cellular tower IDs and/or GPS. Google Location Services is the primary provider for Chrome and Firefox, but this all depends on the browser.
I'm guessing you are working with a company where you paid for that file and it's up to you to perform any back-end development to make it work. MaxMind GeoIP also provides a web service API for that.
If you're interested in browser-based geolocation, a really good tutorial is at Dive Into HTML5.