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The localization will still not be truly harnessed by the websites but by the intuitiveness of the advertisers themselves. There are so many ways to place ads online that are promoted locally, but there needs to be a middle man to make sure the local activity goes smoothly.
Since most business locally aren't even in the loop since most don't graduate the schools they might be advertising too, they usually overlook Facebook as a successful tool to advertise. Having that disconnect is usually the reason ( 2nd to the CPC charge ) people don't usually advertise on it.
I think the system works perfectly, and is only a matter of time before the right technique and the right product makes such a splash locally, that many more people will flock to Facebook in the near future.