Authorial distance is a judgment call that a self-aware writer makes early in the scene. I was once told to imagine the narrator as a camera, and that analogy works well for me.
Some scenes are better served by a panoramic view. Perhaps you want to capture the mood of an evening across an entire town; you’d seek unifying activity amongst the myriad subjects, so as not to focus too closely on any individual (“the women lounged with their paperback heartthrobs”), use a “soft lens” to convey more general detail, and, as a narrator, you’d probably be inclined toward omniscience. I’ve rarely used this method, but Kurt Vonnegut is one my favorite authors, and he had a marked distance to his prose. For all its beauty, it was distinctly outside of the character, and at times, it was so distant it could gloss over the entire planet.
Comparatively, there is the opposite end of the spectrum, where the camera is more of a chip implanted into the brain of the main character, and your reader only perceives their experiences as viscerally and intimately as possible. With this authorial distance, or lack thereof, you’d likely employ stream-of-consciousness to relay the natural movement of thought, openly delve into raw styles seldom explored in fiction, and convey sensation as it is experienced firsthand. (“Son of a bitch! Cody’s hand flexed, stinging, and the pot of mushrooms clanged onto the kitchen linoleum.”) You’d consider your prose to double as the eye of the character, so if they’re looking at something, you’re describing it without noting that they’re looking at it. For example, “I sat down beside him. His sneakers were red and our hands were too close.” That tells you a lot without telling you that this character is looking down, or telling you how uncomfortable they are.
If you move instead to describing the eyes of the perspective (“My eyes flash from our hands–too close–to our shoes–too close”), it doesn’t necessarily lose its impact or significance but it does move the camera just outside of their body.
There are plenty of steps in between, though. It just depends on what type of story you want to tell. If you’re starting an action/adventure/mystery with a single perspective, you’ll probably want to nestle up as close as possible, but in a political drama rife with intrigues, you’re better served to move from one event of consequence to the next, regardless of which characters are involved, so your reader is overwhelmed by the amount of betrayal, so many other characters painfully unaware!
All of this is fine because it’s all conscious, and regardless, it doesn’t actually hinder the storytelling. Your plot and characters may have been better suited to a different method, but it’s really just another way of telling the same story, and a good story is… well… good. There is something like authorial distance but not, because it places an unintentional disconnection, and the disconnection isn’t between the reader and the character but between the reader and the narrator. These are filters, and one of the main reasons I always recommend rereading one’s work, preferably aloud. When a writer uses a filter, a throwaway verb phrase, it places a small but vital measure between the reader and the story, usually “filtered” through the main characters themselves. For example, “She noticed that the mail still hadn’t been opened.” Now consider: “There sat the mail. Still on the counter. Unopened.” Hunt down those meaningless filters and cut them out, placing your reader directly into the story rather than caught in the intermediary of the character. “He smelled the exhaust lacing the air, but he couldn’t make out the plates.” Compare to: “Exhaust laced the air. Its license plate shrank and blurred.”