Not wrong exactly. We have different tax rules for Guernsey and Jersey and they are, depending on which ISO list is used, specified as different countries, which would make the setting up of our tax rules much easier.
As we have to set both as counties of the UK (which they are not) to ensure that VAT is not added it means that the county field on checkout is compulsory. Unfortunately counties within the UK are complicated, they were originally historic or ceremonial, some boundries were changed in the 1970s, and many were changed into administrative counties for local government in the 1990s.
Royal Mail previously maintained a list, however these have been abandoned by the Royal Mail since 1996,.some have recently been re-introduced or renamed. In Wales some are also in the welsh language so are difficult to find when customers are looking for the English spelling. Many people are reluctant to enter the "correct" county, preferring to use either a previous one for historical reasons.
In a nutshell, if the Channel islands of Guernsey and Jersey could be listed as a country, we would be able to have the tax set against the country and get rid of the confusion with regards to the counties for our UK customers.