One question that local businesses often have is, “What are the limits of geotargeting.” The question really has no easy answer as there are a variety of ways to make use of geotargeting.
When it comes to local search engine optimization, geotargeting to a specific country is not necessarily local. In smaller countries, geotargeting country-wide may be sufficiently close to locally optimizing your website that you can get away with it, but we’re talking about really small countries. Most industrialized nations don’t fit that bill.
Country-wide optimization in Canada, the U.S., Mexico, the UK, Australia, Russia, Germany, France, and other large nations is not generally considered local. To drill down to the local level you have to target individual cities or ZIP codes. In cities like Amsterdam, London, and New York, even targeting the city may not be local. You may have to target individual boroughs such as Manhattan or Queens. Even then, that may be too broad an area for local SEO.
Local SEO is best defined as that area which your business serves as long as it falls within a reasonable distance from customers who may patronize it. Chain stores that serve multiple locations across a specific geographic area may have multiple local areas for SEO purposes.
It is best, when thinking about optimizing your website locally, to check with the search engines for their policies. This is especially true is you plan to make use of Google Places and Bing Local-like services.