The point-on distance is the distance where you can aim by putting the point of the arrow on the target. 40 yards is a common point-on distance for trad archery, although it can vary from that distance depending on the individual archer and equipment setup. If your point-on is 40 yards, you can easily shoot at 35 yards or 45 yards simply by holding a little over or under the target. Similarly, you can find out how much more you need to hold over or under the target at 30 yards or 50 yards.
But at 20 yards or 60 yards, the point of the arrow is going to be quite a ways under or over the target. People cope with this various ways. Some practice a lot at 20 yards and learn to shoot instinctively, not caring where the point of the arrow is. Others continue to use the point of the arrow, which will be about 20-24" under the target at that distance. Even though I'm an instinctive shooter at 20 yards, I find it useful to be aware of the arrow point in my peripheral vision, because in the excitement of shooting at an animal or other high-stakes situation, I'm likely to shoot high, and it is good to have a check on my "instincts."
Actually, there is less of an adjustment to make shooting at 5 yards than at 20 yards. Assuming your point-on is 40 yards, your maximum adjustment will be at about 20 yards. From 20 yards out to 40, and 20 yards in to zero, your adjustment will decrease with each increment in either direction. It would be common to have to hold under about 8" at 5 yards.
There are other ways of coping with this situation, such as face-walking and string-walking, but I'd recommend you develop good solid form first before experimenting with them.