Our Geo-Diversity system uses geo-location data from the requesting DNS server to instantly direct requests to the nearest of our relay nodes. These nodes typically have better back haul connections to our origin sites, plus they do caching and replication, so they are able to deliver your content to far away locations much more quickly, (and less expensively) than if the users had to connect directly to your origin site.
ScaleEngine has deployed a gdnsd based geo-diversity system (we are the FreeBSD port maintainers). We spoke at EurobsdCon in October 2012 on the deployment. Rather than only making the choice based on geographic data, gdnsd uses application and network aware checking to make the availability determination based on an up to date picture of the global server pool.