Yes. This can happen.
Even if you set radius targeting, YouTube (Google Ads) can still show your ads outside your specified area because of:
Presence or Interest Targeting
By default, Google Ads uses “People in, regularly in, or who’ve shown interest in your targeted locations.” This includes:
People interested in the area, not just physically there.
Users whose device location signals are ambiguous.
Audience Expansion or Optimized Targeting
If you have optimized targeting turned on, Google will show your ads to “similar” users beyond your settings to improve performance.
How to Fix This
1) Adjust Location Options
Go to your campaign settings.
Under Location Options, choose:
“Presence: People in or regularly in your targeted locations.”
(This excludes “interest in.”)
2) Turn Off Optimized Targeting
In the ad group settings, disable Optimized Targeting (or Audience Expansion if you see that option).
3) Monitor Geographic Reports