An object's luminosity distance (dL or DL) from an observer is a distance measure based upon how much the radiant flux is reduced due to its travel:
L (dL)² = ——— 4πF
For non-cosmological distances (i.e., z ≈ 0), certainly including distances to stars within the Milky Way, this corresponds to Euclidean distance. The concept is used as a means of determining the distance to stars (e.g., spectroscopic parallax) when more accurate means are not available, but is no more than a rough estimate because both and the absolute magnitude of the object and reddening would be estimates. But in principle, if those two factors are accurately known and taken into account, it would be accurate.
For cosmological distances, the curvature of space and the enlargement of space over the EMR's travel-time (scale factor) complicate matters and this versus other concepts of distance differ.