Location is an important factor in search engine optimisation and local search results. Search engines look for results that are relevant to a user’s query taking in to account the users location and language. Search engines do their best to return results form their region, in their language.
It becomes difficult if your website is a dot com that is hosted in the United States and you are in France and your site is written in French. Chances are that many US searchers will be finding your site whilst very few French residents are. That is not just a language issue, it is also a local search issue.
Having a local domain with a local host makes a lot of sense on many levels – at the very least you have similar time zones when there are hosting difficulties to sort out.
Most of the search engines can determine a users country based on their IP address. Web sites can be identified by the domain name suffix (like .co.uk for our region) and they can also determine the physical location of the host by their IP address.
This information is collated and put together so that matches can be made when a user enters a search term. A resident in Australia will find that Google returns results from Google.com.au. Here in Scotland, a resident will see Google results through Google.co.uk.
If your site is hosted in the US, you may not appear in the Google.co.uk results. There are ways around this issue, however the simplest way is to get a hosting in the region where you do the most business. This will get your search results in that region and it will be far easier to undertake search engine optimisation strategies for your local search.