yes it does, the region matters for both the drive and for the software u use to play the dvd. unless u have a region-free drive, u'll have to set the region before u can play a disc. similarly with software, unless u have a program to make it region-free, u'll have to set the region. u can try doing a search for more info on making ur drive and software region-free, altho it's not always possible for ur drive.
this is a good site to start with, it has a lot of region-free firmwares (or ways to patch the firmware), and has other links: http://forum.firmware-flash.com/portal.php