AdWords allows you to select which location your ads will be displayed. This is helpful if you want to show a different ad message in different locations or set different budgets by location (e.g. Webucator can show ads related to programming classes in Redmond, and ads for graphic design classes in the New York City area).
Google decides the location of the searcher based on the following four known methods:
Geo targeting will help you reach an audience with a unique message, thus allowing you to possibly increase your CTR and conversion rate in specific locations.