I must be doing something wrong, because surely I’m not the only one that has noticed that “South America” doesn’t appear as a place in the drop down in Locations (nor does Sudamerica). If you type it in and press enter, it takes you there, but it never appears as an option in the drop down. North America and Central America does, however.
The places in that drop down come from Google Maps, so there isn’t anything iNat can do about it. But if you type in South America and hit enter, it’ll work: https://www.inaturalist.org/observations?place_id=97389
I generally use the Places search in Filters > More Filters, which searches only iNat places.