A geofence is a virtual boundary around a real place. When a device crosses it, an action can trigger. Geofences answer whether you are in an area, not precisely who is nearest.
The longer version
A geofence draws a circle or shape on a map and watches for a device to enter or leave it. It is a coarse, area level tool. Crossing the line can wake an app or send a notification, which is useful for reminders and rough location context.
What a geofence cannot do well is resolve one nearest party from several. Being inside an area is not the same as being beside a specific provider. In a busy place, everyone inside the fence looks the same to it.
Proximity identification works at a finer grain. Instead of asking whether a device is within a region, it asks which provider a device is closest to right now, and resolves that to a single pairing on a server. The two ideas can complement each other, with a geofence narrowing the area and proximity resolving the match.
The Parousya method
A geofence answers a coarser question than the Parousya method does. Presence detection with a short range signal identifies the single nearest provider, where a geofence only knows a device is somewhere inside an area.