Yes, it would be the last constituency that you lived in. For people already on the Electoral Register that is less problematic but for people who aren't, you would need to show proof of where you last lived in the UK. That's one of the issues that British in Europe is looking at: what evidence would be required and are they things that people would actually have available to show. The survey also asks about how you vote or would like to vote. For example, whilst it isn't part of the current proposals, some countries allow electronic voting or in-person voting in your country of residence (e.g. at the Embassy or Consulate).
Some countries have specific constituencies for their citizens abroad, e.g. France has 11 constituencies for the Assemblée nationale (French citizens in Germany are covered by a constituency covering Central Europe and the Balkans).