To be clear, Location is not “broken,” it’s working as designed. Using Location, you should get a result pretty much anywhere in the world because we search Google Maps, whereas the Places search (in the filters) only searches places on iNaturalist. It’s there so at least if you search with Location you will get something. Whether or not the Explore page should work like that when it’s revised, that’s up for debate (although please not on this thread).
So this is not a bug, the site is working as designed and the iNat place for Mauritius does not include La Réunion.
Can you please provide a URL or two? We have to simplify country borders in order to make the site workable at this scale (the more complex a boundary, the more taxing it is on our infrastructure), so if your observations are right by the border, it’s likely they’re affected by this.