Obviously the human arm and leg can only reach so far. Increasing or decreasing distance can make effective strikes with certain body parts difficult for your opponent. If you're far away, your opponent can't reach you at all. If you're very close your opponent can't effectively throw "straight" punches and kicks.
Example: If you're fighting someone who is either very good at kicking or has more reach than you, you will want to be either very far away or in very close. If you linger in the middle, they will have the advantage.
Moving with a technique as you block or are hit can decrease the amount of force hitting your body. If you watch the fights of the late Joe Lewis, you'll notice that the reason he was rarely knocked out wasn't that he didn't get hit, it was that he used distance to take away the power/effectiveness of the hit.
Another obvious fact: Legs are longer than arms. If you're further away you should kick, and when you're closer in, punches should take over.
This last part of the strategy goes with the previous paragraph. Your guard. If you're far away, then kicks are what you need to worry about. A mid level guard is fine. As your opponent gets closer, your guard should rise.