I've read in the past that geo-targeting is about 85% to 95% accurate. That's the short ball park answer.
While search engines are getting better at geo-targeting, I'd say that right now it depends on how specific of a market you're targeting. Done on a national, state or (major) city level and it's going to be pretty accurate to about 95%. If you're narrowing down on specific zip codes, or using custom shapes you will see clicks from non targeted areas.