Do search engines automatically filter local results? So when seoing a site, do i need the location its doing business as a heavily optimised keyword? or if there is no optimised location keyword, will i then just be competing on a national/global level in that industry? thoughs appreciated
Google.co.uk gives a ranking boost to UK based sites (.co.uk) automatically. However if you optimise for web development then yes, you'll be competing on a national level. Use the locality (London, Edinburgh etc.) as a modifier where necessary.
If you're working on a local client I would also make sure to submit their site to Google: http://getlisted.org/index.aspx That way you can get listed on those nice big maps that Google likes to use when you search for keyword city stuff. Hope that helps.
Google is working on sensing which area do you reside in and filtering to display local search listings first. There was a blog by Aaron on this just recently.