Locations concept is not fully adopted in some plugins, in this case - the Katello. That means, Katello resources are not scoped to Locations. Also I feel like Organization - Location mapping was never fully defined, I never understood the meaning of that association, despite it is possible to assign Location and Organization. In other words, I don’t know if it’s Organization within a Location or it is a Location belonging into some Organization. Personally I’d like to change it in a way that Organizations are use for isolation and Location become just some sort of a tag on which you can e.g. set parameters for provisioning or configuration management.
From my experience, when you use both Organizations and Locations it adds a lot of complexity. Many of the use cases can be accomplished with a single taxonomy - Organizations. You can read about some users’ experience with it in this thread How do you use Foreman organizations/locations? - #17 by fresh-pie