Well, there is more to it than that.
Foremost, overall, the applicant must honestly, truthfully disclose his or her current home address, the address where the applicant ACTUALLY LIVES. Applying for citizenship is not like opening a bank account using a friend's or parent's address.
And if an applicant's home address changes after applying, the applicant certified he or she would notify IRCC of any such change when he or she signed the application.
Any other approach is misrepresentation, a criminal offense, a stand alone reason to deny citizenship and impose a five year ban, or a stand alone ground for later revoking citizenship resulting in a ten year ban.
It is a misrepresentation to list a "home" address that is NOT the address where the applicant is actually living. It is a misrepresentation by omission to fail to notify IRCC if the applicant is later, after applying, living at an address other than the address listed in the application.
(And, obviously, identification from a jurisdiction outside Canada will tend to not just raise but highlight the issue if an applicant nonetheless attempts to deceive IRCC about where the applicant actually lives.)
It is not entirely clear why some assert that a home address in Canada is absolutely necessary. I am not sure it is.
It is also not clear whether such assertions are posed as an explicit, literal requirement, or as a practical requirement.
The latter, however, the fact that as a practical matter applying for citizenship while living abroad faces such high hurdles as to be practically prohibited for most, that much is clear. And this is NOT merely about the potential difficulty of failing to timely respond to short notice from IRCC.
Which is to say, I personally do not know that applying while living outside Canada is overtly prohibited. I do not know what provisions of law or rules or regulations that prohibition would be based on. But it is rather easy to forecast it is a very difficult endeavor even if technically allowable. And again, this is NOT merely about the potential difficulty of failing to timely respond to short notice from IRCC, which is nonetheless a big part of the difficulty.
The history of applicants who leave Canada to live abroad while their application is pending is rife with tales of woe and failure. Not all. More than a few who left Canada for clearly temporary purposes, even work, especially a particular educational program, have reported few or no problems in getting scheduled for the oath. But the overall reporting history from those who are living abroad while their citizenship application is in process tends to reflect a tough road, ranging from much difficulty to outright denial.
The risk of being cast into a challenged presence-case is high and that alone can raise the bar considerably. This is a subject extensively addressed in the forum. Anyone considering living abroad while applying for citizenship might want to do some homework, including reading back pages here looking for discussions about living abroad while a citizenship application is in process. Or just go for it BUT being sure to be fully truthful in the process.
All that said, a PR who is living with a Canadian spouse abroad, in a situation where BOTH RECENTLY moved abroad, is perhaps one of the situations with better odds of success, recognizing however the odds it will NOT BE a ROUTINE case are significantly elevated. Again, however, for those who do attempt this, it is imperative to be truthful to IRCC, including as to where the applicant is actually living.