Anybody can have a location category added. They don't have to be notables. Actually, lots of people have multiple location categories: usually where they were born and where they died, but some also have other locations, so, for example, if somebody lived in a small town for most of their life, but happened to die in a hospital in the closest city, then it makes sense to use the location for where they lived, since that's where the real connection is.
The theory is that, especially when it comes to smaller towns, people who lived in the same place at the same time might well be related to one another. So, for example, if you know that Ferdinand Grubstake grot married in Left Overshoe, New Brunswick, and his wife Grisella's maiden name was Pugsley, then if you find out that a guy named Mortimer Pugsley who lived in Left Overshoe and was born 20-30 years before Grisella, then it's at least worth investigating whether Mortimer was Grisella's father.
But ideally, we want the location category to be a city, village, or town, rather than just "New Brunswick". I have seen people use the province, or even just "Canada", but one of the principles of the Categorization Project is to use the lowest category which applies. (For more details on that, see the How to Categorize help page.)
Now, sometimes people end up having to use a higher level category, because they don't actually know exactly where the person lived or died. So, taking my great great grandfather as an example, the correct location category for his place of death is New Horton, New Brunswick. But if all I had was the county, then Albert County, New Brunswick would be acceptable, at least on a temporary basis. If I didn't even know the county, then using New Brunswick might be acceptable, at least temporarily, but personally, I prefer not even to add a location category unless I can at least pin it down to the county.