The correct understanding of "distance" in the context of gravitational pull between two objects refers to how close the two objects are located, meaning that closer objects exert a stronger gravitational pull on each other than objects that are farther apart.
The gravitational force between two masses is described by Newton's law of gravitation, which states that the gravitational force is inversely proportional to the square of the distance between the centers of the two objects. Thus, as the distance increases, the gravitational force decreases significantly.