The function of Geo-IP is to enable you to geographically locate your website to be in an particular country. It is particularly useful if you wish to perform SEO (Search Engine Optimisation). It allows your website to be ranked higher on search results in particular countries.
If you have an website tailored for UK based customers but your IP of the website is located in France, search engines will think your website is of little relevance to UK search results, subsequently your website will be placed further down the search results. Where as if your web site is tailored for UK based customers and your on hosting on an UK IP, search engines will place your website higher as your more relevant compared to others.
The IP is one of the many factors towards SEO, GEO-IP shouldn’t be considered as the only method to improve SEO. There are many factors to determine where your website is ranked on search results.