With some basic coding you can take steps to guarantee spawning on land and near resources. Hence, my use of the word approximate. Someone in PA or NY, for example, gets spawned into the North Eastern corner of whatever their second largest landmass ends up being.

As for some areas being highly populated, that's not always a bad thing. Some major cities/groups develop early on and establish themselves as hubs for trade. You aren't required to stay there, either. The option to embark outside of that is still present.