I get the following information from http://www.google.com/support/androidmarket/developer/bin/answer.py?answer=138294
The developers can also choose free application distribution to users in the “Rest of the world” — with the option to exclude distribution in the following countries:
One of the excluded distribution country list is my current located location – Malaysia. However, why I am still able to download a bunch of free applications in my current located country? Or, is this Developer Help link outdated?
It is an option to exclude distribution to Malaysia. It is not a requirement. That means developers can decide to not distribute their application in Malaysia, but they will anyways because it’s only an option. Not mandatory.