http://www.wordwizard.com/askww/foundaskww.asp?num=2410
"What is the origin of the expression “neck of the woods”?
Submitted by: V Crawford (Sioux Falls - U.S.A.)
Neck of the woods refers to a narrow stretch of woodland and the phrase (orig. U.S.), means a settlement in wooded country; a small or remotely situated community; a district, neighbourhood, or region."
The key seems to be that it originally referred to a narrow (neck) of woodlands.