Yeah, location is a real bug bear for many, many hosts. I know that the location rating does not 'count' in the Superhost evaluation. BUT, I can tell you something. EVERY guest that has left me 4 stars overall has left 4 for location, even if they left 5 stars in every other category and location was the only thing they were disatisfied with.
Airbnb does not tell the guest not to factor location into their overall rating, so many guests are going to do just that. Not including location ratings in the host assessment therefore makes little difference as it can often effect the overall rating the guest gives, plus the location rating shows in stars on the listing. So, the only solution is to remove that category altogether, but hosts have been asking for this forever and Airbnb have no intention of removing it.
It's definitely the category I get marked down most on, but there is definitely NO logic to it. I only have a 77% 5 star rating for my best room. The other rooms, which are in exactly the SAME location, both have 88% 5 stars in that category.
The guest chooses to book in that location and therefore it should be their responsibility, not the host's. I've had the lady who booked my place because it was down the road from the yoga course she was doing, but gave me 4 stars for location. I've had the couple who booked because it was minutes away from their daughter's flat, and mentioned in the review how good the location was, but gave me 4 stars for it anyway. You really cannot win with this category unless you are in the most amazing location ever for a price well below anything else in the area, because otherwise they'll give you 5 stars for location, but 3 or 4 for value.