Google has added “Geographic Performance report” to AdWords Report Center, which provides you with an understanding of the geographic distribution of your impressions, clicks, and conversions down to the ad group level. Do you know if you're getting more clicks from snowy Juneau, Alaska, or sunny Miami, Florida?
If you're using AdWords, you already know about targeting. You can use location targeting with any campaign to only show ads to users in certain geographic locations. You can create a Geographic Performance report from the Report Center in your AdWords account.