It is correct that, while cable boxes can be prompted to transmit data back to the CC, they can not report physical location. Any "bullet" signal sent over the line is received by every box on the system. "Addressability" is what allows a single box to be controlled individually.

Again, like with a cellphone, each box has a unique identification address (known as the ESN (Electronic Serial Number) in a cellphone). This allows the CC to communicate with the box and control services like channel tiers, premium channels, and even the box operation.

A relocated box should work properly unless and until the CC has reason to disable it, such as discovering it's been illegally moved (to allow, say, two homes to share a single account) or if it's reported as being stolen. I imagine stolen ESN's are share among CC's to combat theft.

There may be no such thing as a legally-sold box if they're only sold to CC's. I recently bought two replacement cellphones, and I checked the ESN's with my provider to make sure they were compatible and not have any issues with activation.