keyword proximity means how exact key phrase one put " for ex. search engine ranking and ranking in search engine, so first one is perfect keyword proximity ex.
Forget it, it doesn't matter anymore in SEO, but if you want to know for knowledge, I am agree with joesmith - "It refers to how close keywords are to each other on web pages" -Ishu
Keyword proximity refers to the closeness between two or more keywords. In general, the closer the keywords are, the better. For example, we have keyword as "accelerated dial-up" and "dial-up acceleration".
Google allocates a 'relevancy score' to web pages based upon keyword factors. Keyword proximity is one of those factors. If you think of a multi-word term like 'holidays in france' a page that contains this exact phrase would be awarded a higher relevancy score than a page that carries the phrase 'holidays in southern france'. Although the second phrase contains all the words the phrase is not an exact match and the containing page would therefore get a lower relevancy score for the search 'holidays in france'. Other keyword factors also play an important part including: keyterm prominence and where keyterms are used (page titles / headings / lists etc.)
Keyword proximity refers to the distance in space, as measured in within the keywords as well as the phrases including the keywords without repetition and with contextual relevance. Keyword proximity measures the closeness between two keywords. In general, the closer the keywords are, the better. For Search Engine Optimization,the proximity of the keywords or keywords included in a phrase in relation to each other and one another is of great importance and is the basis of using the appropriate combination of the words in the page titles,headers,paragraphs and page content.