Can I charge delivery by how far the customer is instead of by building?

Yes. Under Settings → Delivery by distance choose By distance from my kitchen, set your kitchen's location, and add up to twelve bands of Up to (km) with a fee, an estimated delivery time in minutes and an optional minimum order each. At checkout the customer shares their location, types a building name or street, and sees the fee and the time before ordering; beyond your last band the page says how far they are and takes no order. The distance is a straight line from your kitchen, not the road, and it prints on the ticket. The Orders & delivery tab in the docs covers the delivery fee.