Overseas soldiers (and to a lot of extent, diplomats/embassy workers/etc) retain their 'home nation' residency.
If you are not soldier/embassy/diplomat/etc, then your residence most likely will be that of where you live (or have spend 181 days of the year).
As for regions, generally its held:
NA - Canada, USA (often times Mexico left out ; ; )
JP - Japan
UK - United Kingdom (English Speaking EU target release)
EU - The 27 members of the EU
EU is not to be confused with EC, EEC, Europe, EurAsia, Eurozone, Schengen, NATO, UN, or League of Nations.
Since most people who are not involved with these concepts are not aware of what they are, the contest rules spells out the countries where this is permitted.
If you feel unhappy about the rules, please feel free to write to your local political representitive and request that all peoples of the world join together into one unified and global community. If only to save on legal fees.
(For those curious, Switzerland is not in the EU, but is in Schengen, and is in Europe, but not part of the EEC, yet is part of the UN, but not a member of NATO, nor allowed to participate in the contest. But they have good chocolate).