A computer works by counting the number of times the magnet passes its sensor, and calculates speed/distance using the circumference number you enter for a particular tire size. You could put the magnet 6in from the hub, or 12in from the hub, but the magnet is only going to pass the sensor ONCE per revolution. All the rest will depend on how accurate your circumference measurement is.

FWIW a cadence computer uses the same technology, but reads RPM directly, without needing to calculate anything further.