Google displays results based on your search location. So people from Los Angeles get different results from people in Chicago. What if your customer is from a different city or even country and you want to see exactly what he/she sees? That is what Search Location does – it emulates the location so that you would get most suitable results for that location.
Update December 2015*
Google removed the option to set search location in their for users. We have since updated our tools to set a search location for Google in a slightly different way than before, but the result is still the same so there is no loss in functionality.