My understanding is that this a a consequence of the “non-curators can’t make a place larger than the area of Texas” rule. Some others, including some that would help with the Caribbean, were suggested here: https://forum.inaturalist.org/t/implement-standard-marine-places-for-the-worlds-oceans/1458
The main issue I see with using a list of smaller places to cover a larger area is that some regions are skipped, for example this project covering the Caribbean skips a couple small islands and large areas of ocean: https://www.inaturalist.org/projects/caribbean-islands-biodiversity It does cover 99% of the land though, which I’m guessing would also contain 99% of the observations in the region.