XBox Cloud Gaming available in Luxembourg

yes totally.

lots of companies offer their services in luxembourg without having a data center in luxembourg.

and microsoft has an office in luxembourg

and lots of companies use azure cloud services from luxembourg.

because it has nothing to do with proximity as much as it has to do with legal rights and licenses.

If Xbox is not sold in your country, the hardware consoles,, at this time they cannot offer you cloud gaming because they do not have the right to sell or provide those games in your country

while efforts are underway to create a unified digital market for the European Union, that hasn't happened yet, supporting hardware has millions of dollars in hidden costs to the consumer. You don't just show up with a truckload of Xboxes and drop them off at the store

https://www.xbox.com/en-US/regions

Luxembourg is part of Europe, any european data center should do.

I am using Geforce Now but I want to play Starfield and it is not available there yet.

Well no as ms.has difference offices ask over the world

Same with Google.

It doesnt mean all products are offered in those countries as ms offers other products

No, they're not

PC game pass does not contain the same games

If you're going to get cloud, Xbox hardware has to be sold in your country at this time. I used to go to Canada to buy TV DVDs because it would save me 40 or $50 a set because of the exchange rate and local prices. That doesn't mean that the Canadian company can sell them in the United States even if it's 15 minutes over the border. Harvey Weinstein used to block the importation of unedited Hong Kong movies, which was unfortunately his legal right. athe would threaten to sue US based retailers.

crossing the border is very expensive. It doesn't matter that there's other countries 15 minutes away, there is still a legal border with a change in government and laws, regulations licenses, permits, etc.