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To do SEO correctly it can be very labour intensive and involve a lot of man hours
but in my opinion backlinking plays a major role
Links are just a small part of SEO
example 1 - search for pregancy related things and next searches will be prioritised for pregancy when you search for "what to expect ..." or "recomended dose" "is it ok to" etc.
example 2 - location based results - yes you can block browser accessing your location. Although each ISP allocate an IP to your home using their local DHCP pool. Which means your approximate location (town/village) is given to them already to decide on local businesses to show up on search.
Having thousands of links means nothing unless they are relevant links and all other aspects of the websites SEO are catered for.
but there are many small businesses who either have not got the time or know-how to improve the website rankings or create good content for that matter.
1. Google suggestions are just the part of Google personalisation, and have nothing to do with SEO. Google is trying to suggest you most relevant and interesting topic - even those you not expecting to search.
2. Google use the same SEO rules for local keywords as for global ones. It obvious that the localization algorithm will sift unnecessary result for you, and left adequate to your town etc.
BTW you have mentioned that all this things happened 2 and half years ago.
As far as I remember they start to personalise Adwords and SERPS few month after they bought Double Click in 2007, and geolocalization is also 11 years old (launched 2005).