I wanted to know what would be the best way to wire two objects and have the Arduino know how far away the two objects are. Can I use RFID or is that just either in range or out of range and nothing in-between? I am making an object that has LEDS in side and it changes color as it leaves the range of another object.
Sorry to say this but:-
This sort of thing used to come up a lot a few years ago.
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There is no way of doing this.
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You will get lots of people coming up with fancy methods to achieve this. None of these people have actually tried these methods but they are absolutely sure it is easy to do. No one ever reports back any degree of success.
Sorry to bump an ooold thread, but I can't think of another way to ask a similar question.
Detecting the distance between two objects, say less than a meter, ideally without having to face each other as such.
There are a few new technologies knocking about since before.. microwave radar proximity sensors, and whatnot.
Perhaps a little bluetooth beacon would be the best bet. It might not detect distance as such, but it has been used to detect an object in range: