For Nominal Target Variables, compute distances to:

Use the radio buttons to specify whether to compute the distances to class centroids or to each observation, for nominal Target Variables.

When the Target Variable is nominal, you have a choice of computing distances to the centroid of each class or to every observation and then consolidating results after the individual distances are computed. The former can be considered a nearest centroid method, whereas the latter is weighted nearest neighbors with weights proportional to the inverse distances.

When the Target Variable is continuous, then distances to each observation are always computed and summarized.