The process of authenticating a person's identity through the validation of presence. Proximity authentication involves using either sensors to determine how close the a key (token or phone) is or an older example of motion detectors to catch a person's arrival. 

One of the leading benefits of proximity authentication is that is greatly reduces the potential attack vector down to right geographically. If a system relies on a person actually showing up for something, then it makes it extremely difficult for anyone not there to try to hack the system.