what do 形 and 便 mean and how can they combine to make the meaning "situation"?
If we look at MoE's definition of 形便, we get:


  形容地理形勢優良便利。


Google Translate tell us this means:


  Geographical situation is good and convenient


Basically you can think of 形便 as a mix of 形势 (situation) and 便利 (convenient).



Wiktionary also gives two English definitions:


  Noun
  advantages offered by terrain
  
  Adjective
  convenient (because of the location)




So is "situation" in there? Yeah, but it's buried in 形.