Geo-targeting, in the context of SERP testing, means constructing a search so Google believes it originates from a chosen place. It is done with URL parameters — gl for the country, hl for the language, and uule for the exact location — rather than by physically travelling or masking your connection.
The point is to see what a customer in another city or country actually sees. Your own browser answers only for where you sit; geo-targeting lets you answer for everywhere your audience is.
See how Geo-targeting changes real results: compare Google from any two locations.
Deeper read: Find hidden competitors in local search