That's the way I read it too, Robin, although I would call it a practice, rather than a policy.
I am not in favor of doing this because we don't have the same kind of standardization control over place entry as we do for date entry. A date must be a value between January 1, 0000 (or maybe it's 0001) and a variable for the current date. Place names can be anything that is typed into the field and can vary widely for the same place, even without considering typos, because of language and times. I understand the motivation for the suggestion, having been overwhelmed by the large number of mostly inappropriate suggestions of potential matches. Although this suggestion would vastly shrink the list, it would also exclude some real matches.