MODFLOW itself do take into account the spatial referenciation of the groundwater flow regime. Main MODFLOW output are water heads on the cell centre and flow in between cells, additional packages calculate solute transport, zone budgets or pathlines; however on the model construction and simulation it doesnt matter where the model is.

Commercial and open MODFLOW pre and post processor can import shapefiles and export georeferenced shapefiles and rasters. Usually the numerical work is divided into GIS and a MODFLOW GUI. Freewat is an alternative for the integration of GIS and MODFLOW; this QGIS plugin allows the creation and simulation of geospatial referenced models without leaving the QGIS interfase.
This article shows the complete procedure to install Freewat 1.1.0 in QGIS 2.18.

More information about Freewat: http://www.freewat.eu/

Download QGIS 2.18 from: http://www.qgis.org