The precision of distances measurements DROPS with distance. We may be confident to one part in 100 nearby, but our confidence drops to one part in 3 or 4 for external galaxies.
Distances obtained nearby serve as a calibration of distances further away. The step wise inter-dependency is frequently referred to as:
Distance Indicators used in the Cosmic Distance Ladder:
1) For < 1 light year (Solar System): Radar off rocky solar system objects
2) Up to few 100 light years (local stars): Stellar Parallax
Recall, this is the method we discussed earlier: watching a nearby star move due to
the Earth's motion around the Sun.
3) Up to few 100,000 light years (scale of galaxy): HR Diagram (Spec. Parallax)
Here, we plot a cluster of stars, identify the Main Sequence, and use our understanding
of how bright Main Sequence stars of different temperatures (masses) should be to tell us how
far away the cluster is.
4) Up to few 10-million light years (scale of Local Galaxies): Variable Stars
Using Cepheids, about 12
galaxies, with distances of about 20 or 30 million light years, have
been measured.
5) Up to a billion light years (scale of Local Universe): Type I Supernova
In the last few years, typically over one HUNDRED supernova are
discovered each year due to concentrated efforts to determine distances to
galaxies.
6) Up to ten billion light years (the most distant galaxies/quasars): Hubble's Law
This method deserves a bit more explanation!