OK, so when you run your log files through say Webtrends or SurfStats it will give you a nice graph of your visitors country of origin. I assume it does this based on the resolved ip of the various visitors.

Obvisously a .co.uk or a .ru is pretty obvious, but do these programs assume all .net/.coms/.orgs come from the US?

I mean if I'm a ISP in Russia can I be russianisp.com?

If this is the case then tracking visitors by country is nearly worthless. Right?

im not too sure but it either bases it upon your netblock or based upon a string that i think can be pulled from your web browser for country of origin, anybody enlighten us, ive been wondering too, but im sure its one of these two methods

It may vary depending on what log file analysis tool you are using. Some probably do use the country code that the IP resolves to, assuming that .com, .net, .org, .mil, and .gov are all US-based. My roomate used to work for a company that did logfile analysys and that was how they did it.

Addording to the Webtrends site, they do the same (from http://www.webtrends.com/support/Solution.asp?id=42322168 ):
The country or origin of the visitor is determined by the extension of the domain name. For example, www.domain.com would be a domain registered to the United States, whereas www.domain.co.uk is a domain registered to the United Kindom, www.domain.ca to Canada, etc. This can pose some limitations when a visitors domain is .com when in fact the user is from a country other than the United States.