Yes/No - it depends on how you set you targeting preferences... you have 3 options:
** People in, searching for, or who show interest in my targeted location (recommended)
** People in my targeted location
** People searching for, or who show interest in my targeted location
The best explanation of each is at https://support.google.com/adwords/answer/1722038?expand=loc1&ctx=tltp&authuser=0
Google is smart - but isnt "all smart". A good example is a "<CityName> Chevrolet" example for a dealer that I work for. Would you believe that the same <CityName> is in California, Nebraska, and North Dakota?? Well, we we seeing a really high visit/click count from 2 of those states - people with no real intention of looking for us using the "** People in, searching for, or who show interest in my targeted location (recommended)" target option. So our choices were to exclude the 2 non-target states, or change to "** People in my targeted location" .. we chose to change the targeting option.
I really hate radii targeting, a good SEMer will take the time to create the target for each city/state in the campaign that is within the radii. In all honesty this is really the best way to guarantee the targets. Esp in hyper concentrated markets (think top 10 metros). Also targeting the city/state allows you to use bid modifiers to better bid for traffic that is converting on your website.
This is a quick high level example - there are of course other factors that need to be taken into account. A good SEMer will show you all the options, where your traffic is coming from, and allow you to make recommendations to them and from them to meet your business needs.
