Looking at their availability map, I don't see too many locations that would have obvious mountains or valleys to block an OTA signal. Virtually any location can have a problem -with a tall building, hill or other physical barrier that would make OTA reception impossible. With 3 exceptions, all their coverage areas are located in or near very high population urban or suburban zones. I assume that would be their business model. Rural areas don't have a lot of people, and less opportunity for revenue. Also, in rural areas that lack cable, satellite is the normal fallback. They don't have very many local broadcasters to begin with.
I think your assumption is not entirely correct.
If we signed up for cable or satellite, we would be provided the local broadcast stations from DFW. But we are WAY too far from the broadcast towers to pick these up OTA. We're in a suburb, not a rural area. So, it's my understanding that WE are the primary market locast wants to serve, along with some people inside OTA range who just don't want to mess with an antenna.
It's seems to be built on the idea that such consumers should not have to pay exorbitant rebroadcast fees to a cable or satellite provider for what is essentially a free service for those who are a little closer to the towers... or maybe on the other side of a big hill. Federal law provides for free retransmission by non-profits and that's what locast is set up to do. I think their odds of surviving a legal challenge are not particularly good, but probably slightly better than predecessors like Aereo.
We used locast in the past mainly to get PBS live, which at the time, was not carried by any live streaming service. YouTube TV now carries PBS in most markets, including DFW. So I haven't used locast regularly in quite some time.
Although I recently did a trial of locast+Philo+Fitzy TV for $30/mo as a possible alternative to YTTV at $50. It worked fine, but not much cloud DVR capacity, some Philo channels didn't work with Fitzy, and no Fox regional sports.