iNat does have a fuzzy search function – it relies on the Google Maps Geocoding API.
Interestingly, if I enter the address from the observation, Google does know where it is:
Your friend’s observation was entered from the web, not from the app, and if I put the same address up in the box labelled “Search for a location” in the web uploader, it finds it for me:
I’m guessing your friend put the location down in the box labelled “Locality notes”.
Since this box doesn’t ask Google for a lat/lon, it would result in an observation with a missing location.
It does seem like there is room for improvement to the UI to make it clearer the difference between those two boxes though.