In the early studio system, the big players among studios divided the country up and owned theaters in different regions, and if you lived in that region you saw only movies from that particular studio, exclusively? That seems unbelievable but that's what was talked about on a series I was watching about films. Really? That's how it was? Why isn't this restricted means of distribution more well-remembered? Didn't people know they were being deprived of movies that were being shown outside their region? When did that end?
Not something I'd ever heard of before but from what I've heard of the early days of the studio system and the power they had it wouldn't surprise me if this was true.
I don't think that's quite right. I think competing studios usually had presences in the same markets. In smaller markets there might only be one distributor, though, who exclusively distributed one studio's films.
The answer to your last question is at the link below.
https://constitutioncenter.org/blog/the-day-the-supreme-court-killed-hollywoods-studio-system
So the large cities had all studio output but what the documentary was likely saying was small towns were divided up among the big studios? Okay, that I can see happening.