Finding nearby players is not hard... though it's not a built in. The manual effort is not difficult.
Today it goes something like:
def nearby = []
def myLocation = getLocation(connection)
server.connections.each{
def loc = getLocation(it)
if( loc.distance(myLocation) < 32 ) {
nearby += it
}
}
Or something like that. This will be more straight forward when players are treated like every other object (later in physics integration).
Also, localized chats are something I intend to implement and I will keep in mind the desire to hook that into scripting and also the need for scripts to grab entities in a certain area. Would be good for lots of things.
And the problem with documenting the API is that it's still a moving target and once I document it then I have to support it.
When I add things that I feel like are finalized then I will write something. Maybe start some section of the wiki.
Bottom line: wish list item noted!