While I think it’s good to have a working knowledge of geography, it’s hard to make the case that it’s necessary for someone to know geography beyond their own local area. Then again, it’s not necessary to read books, or enjoy music, or any of those other things, but a person is considered more knowledgable if they do.
As far as the Europeans, meh. I’ve heard them complain before that Americans don’t know geography, or only speak one language, and I think it’s bunk. They don’t realize how big the US is - anyone in the lower 48 can get on a plane, fly for 4-6 hours, get out, and still be in the US, speaking English. Try that in Yurp. Heck, they can’t take a walk and not end up in a foreign country speaking some other language and wearing funny clothes.
In general, US citizens know the states around them, and have a good idea of the names and general location of all the other states. If, say, Wisconsin spoke a different language (and some people could make a case that they do), chances are that the people of Minnesota, Illinois, and the UP would probably also speak Cheesish (or whatever language the Wisconsinites adopt in my theoretical multi-lingual Northern state world).