You are correct. The Location Optimizer is a very specific type of macro and is really considered a legacy macro that we have kept in the tool as we had specific businesses ask for such a macro. The iterative macro however is a very useful and powerful macro that will allow you to set parameters to get out the result you want. Use cases for an iterative macro might be expanding trade areas until it contains a specified number of customers, Supply and Demand, or Interest rate calculations.
Hope that help,