not sure this is a bug exactly, or at least this is something that is a frequent source of confusion / frustration that i’m sure is on some long-term roadmap to address.
for now, instead of using the location box next to the species box to search for a place, use filters > more filters > place, or this: https://www.inaturalist.org/observations?place_id=2208&subview=map
there are lots of existing threads that go over the difference between location and place in the Explore page. you can search the forum, or maybe try one like this: https://forum.inaturalist.org/t/bounding-box-vs-shapes-when-selecting-by-country/33709.