What is the precision of traceroute and ping location reports?

The IP -> location mapping is based on the MaxMind GeoIP City and GeoLite City databases. 

Because of licensing terms of the database, if the destination is an IP address, the location for this IP address is taken from the less precise GeoLite City database - in all other cases (inner nodes of traceroute and when the final node is a domain name), the more precise GeoIP City is taken. The precision data for both databases is here:
In certain cases (e.g. when the IP is assigned to an international company with the seat in a different country or when anycast is used), the location information corresponds to the company seat rather than the actual server location. At best, IP-based location services provide the city, where the IP is located, but cannot be used to provide its exact location.

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