Here's how it works, to the best of my knowledge:
The game uses some hidden point system to determine which tiles are the most valuable ones to start on. Starting bias skews these point values somewhat.
Choosing "Balanced" start location when setting up means the game tries to make sure that every player starts on a tile with the exact same point value.
Choosing "Standard" start location means the game tries to give every player a starting tile with a decently high point value, but also tries to keep the values of each player's starting tile within the same ballpark as each other.
Choosing "Legendary" start location means that all players start on tiles that have the absolute highest point values on the map, even if some of those tiles are wildly better than others.