I dont remember what game it was, but there was a game where the player’s country was displayed above their character’s head. Not sure if that game was ever moderated or taken down, but seeing that it is a supported roblox function, I don’t see how they could moderate against the use of it.
But I do see your concern with it invading the user’s privacy, but it is a broad area since countries are generally large.
My take on this is that if roblox has this in their list of functions, it’s good to use.