How does facebook determine(or any reliable way) exact location so they can serve ads accurately [on hold]

I want to display ads the way facebook does it. In facebook, there is ads targeting. For example, I can let my ads show only to users of ‘X’ city. How does facebook do it? If you think its a big thing that can be done by big guys only, how can a small startup with little money do this? Is that accurate. Because, it will be like ‘fraud’ to show ads to ‘Y’ city guys when the customer(advertiser) want to show their ads to people of ‘X’ city. If its out of my reach, I would better drop that idea than targeting city.

What about locating ‘country’ ? Is it simple(can be paid service) and 100% accurate atleast ?

Source: facebook

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