Businesses very often start out by targeting a few specific areas. This allows them to invest all of their budget in only a few places, often giving them a good return on investment. If a business is doing well in the initial areas they targeted or have since discovered that those are not the best areas for them then they may look to target new areas.
With online marketing, you do not have to be based in an area to market it so the world really is your oyster. The trick is to not take on too much at one time as your budget and your focus will be diluted and you may see few or no results.
Adding location pages to your website can help to get your site ranked on the search engines for those places. You will need to ensure that these pages are highly optimised for the search engines but also read well for the visitors that land on it. You could design smaller websites themed around specific cities for example to allow you to really target that area successfully. Having smaller websites will allow you to change text and images to fit in with that area.