We characterize the capability of time-resolved reflectance measurements at small source-detector separation (less than 5 mm) to localize small inhomogeneities embedded in an otherwise homogeneous or layered diffusive medium. By considering both absorption and scattering inhomogeneities, we demonstrate the improvement of this approach in terms of contrast and spatial resolution, as compared to more typical set-ups involving larger source-detection separations (few centimeters). Simulations are performed exploiting an analytical perturbation approach to diffusion theory and a four-layer heterogeneous time-resolved Monte Carlo code, considering realistic tissue geometries. Exhaustive investigation in the parameters space is reported.