The homescreen shortcut uses either ‘c’ key or the ‘pencil’ key depending on which device you are using. There’s an optional prompt that pops up a reminder of the shortcut (see first screenshot - it used just be the pencil key on supported devices), but this can be turned off if you wish.

Above is an example of a basic Google search for ‘pub’. With ‘My Location’ enabled an appropriate set of local results is offered automatically. The My Location feature ties in with and uses ‘My Location’ from Google Maps (Latitude). Either the device’s GPS or cell-positioning can be used to obtain current location information.
The location specific search is a very useful way to find a service, shop or other object that is physically near by without having to worry about where you are or how to enter your current location. As well as business listings, you can also get information about local event listings (e.g. cinema film times). This is exactly the sort of search that is most useful in a mobile context. It is a neat solution, which has been slickly implemented.