Think as though you are looking for your own site on the internet. Say that your site is a restaurant. You may type into the search field the keywords and your location, searching "restaurant picadilly". The results list spits out the most useful results finding a restaurant in the Piccadilly neighbourhood of London England. Local SEO advances your chances of being seen on search engines for this specific location and reaching your target audience. Let's go through the process of positioning your site based on location.
To further your reach, maybe to all of the department or region (example : restaurants London). This type of localized search is extremely useful for finding professionals and activities in a certain area (lawyers, hotels, rental agencies). Googles goal is to make searches easy and useful for those using their service : if it can eliminate erroneous information it will !
Google automatically generates the results based on the IP address of the person doing research. For instance, if you are in Manchester and you type "restaurant" you will see all the restaurants in your area!