Part of Google's personalization and especially Local Search efforts involve knowing where you are located.
That means Google can serve up a more appropriate search results page. If you enter "dentist" into a search and Google knows you are in Largo, Florida, it can serve up listings of dentists in your immediate area.
But how does Google know where you are located?
There are actually several different ways. If you are on a GPS enabled smart phone, such as an iPhone, various services, including Google Search and Maps, can ask permission to use the GPS info.
On a land-based computer, Google can get a pretty good idea of your location from your IP address (your computer's actual Internet address). This was actually the first localization information Google started using years ago. It wasn't necessarily very accurate - once upon a time it had my location off by 700 miles - but has gotten better over the years. Currently it thinks I'm in Dunedin, Florida, which is actually the next town over. Not bad, really.
You can easily from the left column in Google Search change your location. That means you can also search as though you were in a completely different location. Try it some time.
Finally, if you are logged in to a Google account, you can specify your location in the settings tab.
Some people are concerned with privacy issues. There are ways to defeat Google's efforts, but to me, it is just a convenience - Google serving better results faster as to what you are looking for.