People can hear you from up to 20m away for normal chatting, 100m for shouts. As a rule of thumb, open the mini-map and set it to be about 4cm (1.5 inches) square. The circle of compass-direction letters (N, E, S etc) are roughly chatting distance away from you.
You'll also notice some chat text is grey and some is white. The grey text is from people who are further away from you.
You can also send Instant Messages directly to people or groups from all across the SL world, just click the (IM) button at the bottom left corner of your screen to start an instant message. IMs are private, they can be heard only by the person or group you are addressing.