Google wants to know whether your business serves customers at their locations or not. If your business provides services, such as delivery or home repair, to locations in certain areas, you should choose service areas under Google Places’ “Service Areas and Location Setting”. Then, you have two options: “Select how your service area will be specified, either through a distance from a location point, or through a list of locations (towns, zip codes, etc.)” I believe there are some issues with the option to select area by radius, so choose “List of areas served”, and list all of cities and zip codes that you actually serves.
For other local search, visit our Google Maps Algorithm page, Google Maps Optimization (Google Maps SEO) page, Live Search Map and Yahoo Local page.