Oh wow, I had no idea that “virtual location” is even a thing. Imo it should not, I don’t even see a use case for that, it just seems like straight-up lying about the traffic exit location.
Glad to see the provider I occasionally use, Mullvad, passed the test.
Many providers in the list, such as PIA, warn the user when a virtual location is chosen. The point is to get a wider range of countries. Most websites, such as YouTube and Netflix, are fooled by the virtual locations, so it works!
I used a VPN that had a virtual location of China for a while, which avoided ads on some websites; China blocks those sites, so those sites don't have any ads in China, but the VPN exit wasn't actually in China so it could reach the sites fine.
It depends on whether the VPN is lying to you. Proton, for example, makes them quite explicit in the software and even lists them for you here: https://protonvpn.com/support/how-smart-routing-works and seems like NordVPN also has a page explaining that.