Where do you live? -- I live nearby. (correct) <-- nearby = not far away / close -- I live near. (correct) <-- near = close -- I live near the post office. (correct) <--- near = close to -- I live nearby the post office. (incorrect) <-- nearby can't be used as a preposition

You can use both to talk about something that is close to another thing. The City Hall is nearby. The City Hall is near here. But, as you can see, Nearby is used by itself and Near is used with the reference element. The idea is that with near you need to mention what is the noun close to, but with nearby it isn't necessary, since the reference element is already known or implicit. Examples: The Cafeteria is near my house. I parked my car near the restaurant. Some people like to live near the river. I love this place, there are many bars nearby. We are located in the best seats, the emergency exits are nearby. There are many beautiful buildings nearby.

The word "nearby" is generally used to express locations that are "close by". For example, someone might ask, "where do you live" or "where is the post office" and you could say, "nearby". We would not normally use the word "nearby" for objects. As a contrast, people would say, "put a pencil near the phone" or "put the clock is near my bed". Also, the words are not interchangeable with expressions like "it was a near escape", "he is near and dear to me". Hope this helps

Hey there Abraham. Check out this link! http://www.learnersdictionary.com/qa/what-s-the-difference-between-near-and-nearby