I confess that I was not aware of the Nearby feature, but TechCrunch checked out the update. The new update for Android and iOS Facbook app users rolls out to 1% of users Monday and to others "soon."
The update comes from the Gowalla team and focuses on local business discovery and TechCrunch argues it means trouble for Yelp and Foursquare (but we've heard that before).
The big deal is that Facebook uses all it knows about you to offer up businesses of interest. John Constine thought it did a pretty good job, but then he didn't know there was a Creole restaurant within four blocks of his appartment. Maybe I'm biased, but does he not get out much?