The Sightings tab shows which Pokémon are within a 200 meter radius.
All the nearby Pokémon are shown in relation to pokéstops near the player. The same type of Pokémon are grouped together. For example, instead of showing multiple Rattatas in the area, there is only one Rattata icon in the locator. If the Sightings tab is empty, players can open it and tap the "No sightings yet" message to force refresh the list.
There used to be footsteps which showed a trainer's proximity to the Pokémon, but that was removed in the v0.31 update.
After the Nov. 22, 2016 update, The Nearby tracker uses the closest Pokéstops within the trainer's virtual view. 
- ↑ My tracker just updated with an enhanced "Nearby" feature. /r/TheSilphRoad. Retrieved on 2016-09-22.
- ↑ Nearby feature update. Retrieved on 2017-3-1.