Just remember, Internet speed tests like Ookla represent a theoretical maximum for blasting network data from one end to another. It doesn't take into account real-world overhead like file access times.
For example, you want to download a large MP4 or a Windows ISO. The server must load a giant file partially into memory from its own disk, begin a network download session, and your PC has to accept that data and write the file locally. Now your real-world "speed" has dropped.
What Ookla is doing is sending a raw stream of bytes, and your test client is accepting that data and immediately throwing it away. There's no processing done on the sent data (which is dummy data any way). The speed test is more of a bragging rights thing.
To your other question, large Internet services will partner with other companies to create Content Delivery Networks. A CDN is a pool of servers scattered across the Internet at strategic locations. The idea is instead of everyone ending up on the same server, and bottlenecking traffic, your download request is silently redirected to a parallel "local server". Now "local" may still be far away from your location, but hopefully it's better than the worst location.
Using CDN's, companies like Amazon and Netflix can stream movies more efficiently and each location doesn't have to be overbuilt in network capacity. When a CDN fails, you get random connection errors or slow downloads, and it's up to the CDN provider to go fix themselves.
This is how Windows Update can scale up whenever Patch Tuesday or a new Windows release comes out.
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