Ping is the time in miliseconds that it takes for the server to send you a 32b packet and for you to bounce it back to the server. Obviously if you live very close to the server, the packet has less distance to travel to get to your pc and then bounce back to the server again, also if you have a broadband connection it can handle a lot more traffic than a narrow or midband connection, so will receive and bounce the ping back a lot faster than a 56k modem would. If you live on another continent to the server, the server has to send the packet across the ocean transit lines, then through the exchange and to you, and your pc has to then bounce the ping back to the server, which may take substatially longer.
Most scripts on MTA servers just read your ping and calculate that if it's higher than the specified limit for a certain amount of time, it kicks you. Most servers will have the pingkick set around 150-200ms to allow international players to an extent, but it's always best to play in a server which i slocated on the same continent as you.