Help understanding how zip code and location works
 

I have zip codes turned on, and I'm having trouble understanding how it's currently working.

I'll try to explain this as best as I can so please bear with me.

When I register as a new user, I'm not asked for my zip code. I'm asked for location, which could be any text: zip, country, city, planet, etc.

When I place an ad, I can put my zip code in of course.

No matter how I log in, (admin, testcalifornia, testnewyork, etc.) all distances are computed from my real location in Central Illinois (61701). I can't find anywhere in the data base where my local zip is stored, or where I was asked for that information (besides posting ads.)

Where is the system getting "the viewers" zip code?

If you have zipcode integration turned on in Admin Options then the viewer can input there zipcode when viewing ads or categories of ads to see the distance from the poster.

I have attached two images to illustrate this

If it's not asking me to input my zipcode, (and it's saying 1008 miles from you) can I assume that it's pulling that zip code from a cookie? I attempted to clear all my cookies and it still computed the distance from my real zip code (that I must have entered previous to me even looking at this feature in depth.)
If so, what's the cookie name?

The cookie would be named zipcode. If you get the distance calculation then that cookie exists for your site.