I will check this with the customer service.
For certain insurances it makes sense to offer differentiation based on the country or region. I can image there would be a difference in premium for an all-risk car insurance in Paris compared to Helsinki. I would think this is less of a problem for a general personal liability where factors such as children and pets contribute more to the risk. I have been in situations where I needed a specific insurance from a different country than that I was resident of.
But the reasoning of N26 that if you live in country X, you should definitely not have this feature because people in country Y only use this.
For N26, the first thing that comes in mind is the Maestro card. Only offered for residents of Austria, Germany and The Netherlands. I often visit Germany and Netherlands, in fact, as of the time of writing I’m less than 5 km away from the German border.