The function $\Psi$ is the Hausdorff distance. Its geometric meaning is: $\Psi(A,B)$ is the infimum of numbers $\delta$ such that no matter where you are in one set, you can jump into the other by traveling at most $\delta$.
It's not immediately obvious that my description agrees with your definition of $\Psi$. But it does. For any $\delta$ as above, $\Psi(A,B)\le \delta$ by the triangle inequality: the distances $d_A(x)$ and $d_B(x)$ cannot differ by more than $\delta$, since once you can get from $x$ to one of these sets, the other one is at most $\delta$ away. Conversely, $\Psi(A,B)\ge \delta$ because when the supremum in the definition of $\Psi$ is restricted to $x\in A\cup B$, it describes what is written in my first paragraph.
Given the above, the formula $d(a,b) = \Psi(\{a\},\{b\})$, stated by Lee Mosher, should be geometrically clear.