It's a joke based on real-life American tendencies to be, shall we say, less than well educated in world geography.
Here we go again. As opposed to, well, whom?
Let's take Germany, because I live there. Give them a map of the U.S., or Africa, or even Canada without the names of the states, countries, or provinces written in and ask them to name them. Ask any German to find Lake Victoria, correctly name the Great Lakes, or keep Bhutan and Nepal apart. Now ask them to spell, not pronounce, but spell Massachusetts, Mississippi, or Tennessee. For amusement about pronouncing, just watch German news anchors try to get "Arkansas" or "Newfoundland" right. And for an encore, ask them which state the Grand Canyon is in. In half of the time, the put it in Colorado, because, you know, the river that runs through it. German news reports regularly put the Pentagon in D.C., which you think Google Earth would take care of. Oh, and it's great fun to ask a German which is the capital of California, San Francisco or Los Angeles.
This is not to dump on the Germans, because
you can do the same thing with about anybody. The fact is
people everywhere are ignorant. The difference is that it is fashionable in certain American circles to dump on U.S. education -- not always without reason, of course -- and then it gets picked up by the rest of the world for their own reasons. In the mean time, Americans are unaware that
only one third of German school children even know who built the Berlin Wall. In other words, while Americans are worrying about their kids not knowing which countries the Nile flows through, German kids don't even know their own history. Education systems everywhere suck.
So, yes, there are some Americans who have problems with geography. But so does everybody else.