Bithell's test requires an understanding of the relative risk as a function of space. Suppose that the only cause of a cancer were factor X, and exposure to factor X were a function of distance. Then, given the distribution of factor X, we could create an exposure function, through which people would pass as they live their lives, accumulating exposure.
In the immediate vicinity of a heap of factor X, the exposure would be (locally) some decreasing function of distance from the heap. The RR would peak at the focus (as a result of increased exposure).
Bithell's test requires that we construct a relative risk function (a function of distance from the focus), and we then compare known rates for the subregions around the focus with the expected rates given the disease background, to check whether our model of relative risk is reasonable. It could fail to be reasonable for a variety of reasons: