It looks like you don’t understand the merging process.
You need to select all locations you have in the same suburb, and then select the correct one, and all will mill merge into one.
For example, you have:
Bourke Street, VIC, Australia
Collins Str, Victoria, Australia
Melbourne City, Vic, Australia
Melbourne, Victoria, Australia
Select all 4, then merge selecting “Melbourne, Victoria, Australia” as the primary.
All listings in the 4 locations will have their address changed to “Melbourne, Victoria, Australia”.
The geolocation is not your problem, the only problem you have is that you imported street names as cities, and cities as regions.
You can export all your listings, correct the addresses in the CSV, and reimport with the same post IDs, overwriting your current listings.
That will fix the addresses for the listings too, but it will not delete the bad cities from you locations. That can only be done by merging.