On their website it mentions that Paypal is available in more than 190 countries and regions, Paypal is also unavailable in China.
They do it to protect themselves. Most of the countries that PayPal don't operate in would either highly tax them on their work, or it's where a lot of fraudsters are based. It's just the way PayPal is. They have to protect themselves and their business from legal threats, and also countries that tax a lot are unappealing for PayPal, as most of their earnings are being taken back through tax. There's no point in them operating in those countries, not in PayPal's eyes anyway.
Paypal, like eBay (now the owners) is a private company - with the usual objectives of keeping shareholders happy. This means making increasing profits for them at minimum risk. It's relatively easy to do business in countries with a stock market and democratically elected governments - but otherwise starts to get very risky. Would you keep your own money in a country making maybe 3% on transactions if there was any risk you could lose the lot - at the whim of a government deciding to freeze or keep it? If PayPal assessed the risk of doing business in a problem country meant they needed to charge, say 25% on each transaction - would you still want to use their services? I guess not - and that's why they don't bother.
It depends on the tax from each governemnt, if PP can make profit in any country they will surely extend their services. Now the Indian government is pissing off PP which has affected a lot of freelancers.