There are several common reasons why this might be the case.
Campaign misconfiguration
It's possible that location targeting settings are incorrect.
Perhaps the wrong area is targeted. Or perhaps multiple areas were accidentally targeted. Maybe the scope radius is too small or too large. Perhaps the advertiser's location is targeted, not the location where ads should serve.
Log in to the applicable campaign and carefully double-check its location settings. Check both the targeting map and the Selected Locations list.
If you make changes to location settings, watch campaign analytics for a few days before drawing a conclusion about the effectiveness of the change.
IP address used to geo-locate
By using an IP address, the location of a user can be inferred with a fairly high degree of accuracy. However, there is no absolute association between an IP address and a device (and its user).
Organizations route traffic through centrally located IP addresses, possibly remote from an end-user. For example, a corporate user in Wichita might be connected to a central server in Denver.
ISPs dynamically (re)assign IP addresses, making accuracy problematic. For example, IPs can be reassigned to new locations, making geo-location databases inaccurate.
ISPs use proxy servers, which assign many users private IPs behind a few public IPs. The proxy server might be remote from an end-user. For example, an end-user in Tahoe might be connected to a proxy server in Reno.
There is no fix for this because, technically speaking, things aren't broken.