This question already has an answer here:
In the schematic for the Sparkfun Arduino mini pro 3.3v https://cdn.sparkfun.com/datasheets/Dev/Arduino/Boards/Arduino-Pro-Mini-v14.pdf there's a 0.1uF capacitor (C3) just left of the atmega ground pins going from vcc to gnd. In the upper left corner on the power regulator there's also a 0.1uF (C10) cap from the output vcc to gnd which should be essentially the same thing.
What is the design rationale here? I assume they're doing this for power smoothing but why not have a 0.2uF cap or two parallel 0.1uF caps on the regulator output? Are they trying to say that the other one should be closer to the atmega?