If y is exactly located at y and also exactly located at z, then by Functionality, y equals z

This says that exact locations are exactly located only at themselves (hence that ‘chains’ of exact location are always ‘short’). To see why this follows from Functionality and Conditional Reflexivity, suppose that x is exactly located at y. Then by Conditional Reflexivity, y is exactly located at y. If y is also exactly located at z, then by Functionality, y=z.