Geo zones are customized zones used in calculating shipping and taxes. We can add Multiple countries and zones can be added to one geo zone to customize shipping methods.

Let’s take a tour by exploring the setup of zones.

Log in to your admin panel and go to System> Localization> Zones. Obviously, all zones are already on the list, so no need to add more! 

Next, Setup the Geo Zones

Geo-zone to help you define a region to customize to include the region of your choice.  

Navigate to admin > System >Localization > Geo Zones, and it'll display the list of geo-zones as default. You can create the new Geo zone. 

Checking an individual box in the first column will select the geo zones within the same row. Once selected, you can choose to  "delete" the Geo zone on the top left corner and click the + button to add new. 

Note: You can’t be deleted if the zone is already in use of your customer. 

You can add zones from many countries. This allows you to create a set for a specific area or region for shipping. E.g. India is divided into parts of the states. States are called zones here

I think you now understand about zones. If you are still confused, take a look through the screenshot

Geo Zone Name: Add your Geo location name 

Description: Give the short description of geo zone.

Click the + button to add a new geo zone.

Country: Choose the zone country.

Zone: You can select the zone of the selected country.

Congratulations !!! Now your store zone and geo zone is enabled and you can use this in shipping/tax calculation to your store, which will help your customers make informed decisions before they make a purchase.