The new location-based search option is now available to English users of Google.com. To access it, simply conduct your search as normal, select "Show Options" -> "Nearby." From there you can switch between your default location and a custom (manually entered) location. Results can also be filtered by city, state or region for broader or narrower results.
The addition of Nearby to web results is yet another way Google is highlighting its location savvy and pimping out its Place Pages service.
As you may recall, Google recently released Near Me Now for location-based mobile queries, and Google Buzz for mobile offers a check-in based social experience. In the future we expect all of Google's location services to complement each other more and create a complete picture for an entire location-aware Google experience.