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Transformation - InterpolationSpatial Inverse distance
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Geo datum used to calculate the distances in meters between the points. To calculate distances efficiently and to pre-sort the input points in a grid the earth's curved surface should be transformed to a flat two-dimensional surface. When the input geometry is not in meters calculation of distances will be very slow and a search all is required when there is no exact match. When there is no region/country specific coordinate system available choose a utm zone that best fits with your output region. http://en.wikipedia.org/wiki/File:Utm-zones.jpg. eg. UTM55S for Victoria state in Australia. Only use zone number and N for northern hemisphere and S for southern hemisphere.
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