You're correct, knowing an IP may help give someone an idea of where you are in the world (which could be inaccurate because of ISP configurations, or proxy settings used by the user). It's probably not even accurate to say there's a possible radius ... more like a city, or state, or region most likely.
Since this is /r/computing, and I have interest in computer networking, I thought I'd elaborate further. This is a gross simplification of how IP addressing works, but the range can be anything from 1-255.0-255.0-255.1-254 - the addresses 1.0.0.0 and 255.255.255.255 are reserved addresses for network and broadcast, and can't be assigned. There's a lot of resources online for why this is, but check out https://www.coursera.org/learn/computer-networking for a course on the matter.
This address space represents the total number of IPv4 addresses - 4,294,967,296 IPs - but there's some caveats to that number. Namely, Private IP addresses are carved out of this pool of numbers and cannot be assigned by ISP's to customers for their WAN (Wide Area Network, or Public) interface. Also these networks are assigned in blocks to subscribers, which is determined by a subnet mask value. The ISPs all have a portion of the total public IP address ranges, and carve up their portions to their subscribers using subnet masks.
Going back to the question of using an IP address to find the location of a user, IP addressing does only give a partial idea of a user's location. IP addressing is also VERY easy to spoof or obfuscate using a proxy service. As others have mentioned, the process involved to backtrace an IP address to a physical location or subscriber is not trivial, especially if you're not a law enforcement agency or have authority to issue subpoenas. Furthermore, the IP address you obtain would most likely be a public IP address for the customer or business modem, which acts as an interface between the subscriber's Private network and the Public internet. This modem is likely in close proximity to the user, but doesn't necessarily align directly with the user, and in enterprise scenarios could be in separate buildings from where the end user physically resides.
You can certainly run a "whois" on an IP address, and http://cqcounter.com/whois for example gives a good "idea" of a location for a public IP address, but to really get more detail on what subscriber was using that IP address, and when, would require accessing the DHCP or static provisioning systems for the related ISP, and cross referencing DHCP or static configuration logs against a subscriber ID table or similar ... not something easily done, or easy to do without significant investment.
Then there's IPv6, which is much more unique to a user, but still would be difficult to backtrace to a given location because of how address assignments would be handled by the ISP and would require either the ISP to divulge subscriber information based on IP assignment, or for the investigator to access the subscriber-to-IP relationship through some other method.