Allowlisting is the process of granting trusted entities access to data or applications. When you enable location-based access and register the IP addresses of computers, you're storing those IP addresses as trusted points of access.
You can include IP Addresses of all computers hosting cloud applications (both Oracle and non-Oracle) that require access to Oracle Applications Cloud. In other words, you're allowlisting those IP addresses. Users signing in from those computers are considered as trusted users and have unrestricted access to the application.