If my Selling Location list is empty, which countries can customers pick at checkout?

Yes. When Settings → Store Settings → Selling Location has no countries, or none are Enabled, the checkout Country dropdown shows the full country list, so checkout never gets stuck.

As soon as you add one enabled country, the dropdown shows only your enabled countries.

To limit where you sell:

1. Open Selling Location and click + Add Country.
2. Pick the Country, keep Status as Enabled, and click Add Country.
3. Repeat for every country you ship to.

Countries set to Paused are hidden from checkout but stay in your list.