How UPF can be selected based on location?

This is done through UE IP pools.Your UE IP Pools are allocated in to per APN per UPF so once allocated controll plane knows which IP is which UPF.

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UPF selection in a 5G SA network is performed by the SMF, not by the UE. The SMF selects a UPF based on factors such as the UE’s serving area, DNN, S-NSSAI (network slice), operator policies, UPF load, and proximity to the serving gNB. Deploying a nearby UPF helps reduce latency and optimize traffic routing.

Detailed explanation with examples, check out: :backhand_index_pointing_right: https://techlteworld.com/upf-selection-in-5g-network/