Narrative distance is that feeling of closeness (or lack thereof) between the reader and the characters. There's no right narrative distance, and it's up to the writer to decide where they want the reader to be. But it's easy to fall into that "limbo narrative" where it isn't clear where--or even who--the narrator is.
There are some common words to help determine narrative distance. If you're unsure where your narrator is, or want to get closer or farther away, here are some things to search for:
These are the little words like to and for that imply motive. In a close POV, they show the action and let the reader figure out the motivations by what's said and done. A more distant POV might tell (explain) those motivations.
The zombie lunged through the open window. Oh crap! Bob grabbed the shogun and pulled the trigger.Far Distance:
Jane bit back a frustrated scream. There was never a shotgun around when you needed it. She spotted an axe hanging behind the bar. That'll do.
Bob reached for the shogun to blow the zombie's head off. Oh crap! he thought, and pulled the trigger.(Here's more on the difference between telling and a far narrative distance)
Jane ran for the axe hanging behind the bar. She realized there was never a shotgun around when you needed it.
These are words like: felt, thought, sensed, believed, realized, ignored. They explain to the reader what the narrator is thinking or feeling instead of showing actions that let the reader figure out these things from observation. These can feel told, but there's a difference between a distant narrator and telling, though it can be a subtle thing. Telling is more common when we rely on the explanation to convey the information to the reader, and do nothing in the text to back that up. It also feels more told when there's no sense of a narrator to those explanations, just the author filling in the gaps.
Telling: Jane could feel the zombie just beyond the edge of the light. They'd found her.
Showing: Jane's skin prickled. The zombie groaned beyond the edge of the light, a presence in the darkness, a lurking hunger. They'd found her.
Telling: Bob ignored the warning signs that zombies were close and went in anyway.
Showing: Bob ignored the the shuffling feet, the groaning, even the smell, and went in anyway.
These are words like: by, since, after, when, before. They're explaining the order of events from a distance because the narrator knows what happened. It could also be summarizing a decision the reader never gets to see the POV character make.
By the time Bob got to the gun, the zombie had broken through the door.Pitfalls of Narrative Distance
Since Jane was already on top of the dumpster, Bob ran for the Chevy Suburban.
When Sally came out of the house, then zombies charged at her.
A far narrative distance makes it easier to tell instead of show, so if you decide on far, just make sure the one doing the "telling" is the narrator, not the author poking in to explain things.
On the flip side, a close narrative distance makes it easier to throw in every single thing a character thinks and does, so the story bogs down. Even though readers are close in the narrator's head, we don't have to show every thing they think or do. We can summarize a bit or skip things entirely if they story reads better that way. It's all about balance.
(Here's more on common red flag words for telling)
Which Narrative Distance Do You Use?
It's just like POV--whichever you prefer. It all depends on how close in the head of your narrator and POV character you want the reader to be. The closer you get, the more personal and judgmental (as in, characters judge what they see and have an opinion about it, not the snotty type) the story reads.
ETA: You hear all the time about filter words and POV, and Juliette Wade did a fabulous post on this. A must read if you really want to get this concept.