If school choice (US here) became the norm and people could choose where they wanted to go, vs the current standard of attendance being based on where you live, how would that work? Basically, if everyone wants school X, and obviously school X can’t accommodate everyone, how will it work? Obviously not everyone would choose X; some want Y for location, others want Z for certain programs, but in general..?
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As you have noted, it is impractical for parents to have a completely free choice over where they send their children for school.
The solution to this is that schools will place limits on attendance, the most obvious being a maximum cap on the number of students they can support. Any students wishing to enroll above this number will be denied and will have to enroll elsewhere.
In most countries there will be some governmental oversight over public schooling at least, so they will to some degree be paying attention to the population and available resources to ensure they can provide for the people under their jurisdiction. When it comes to schools this often means setting boundaries for attendance so that pupils living close to a school will get priority over those living further away (and closer to other, less desirable schools), but often there will be exceptions made as appropriate.
In the UK this does mean schooling can be a big factor in choosing where to live – buying a home in a certain area will place you within the catchment of a particular school, so people will factor this into their decision (sometimes to the level of moving home when children reach a certain age to ensure a place in a specific school).
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