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What is the difference between by and near? According to Oxford living Dictionaries, the meanings seem to be identical

by
5. Indicating location of a physical object beside a place or object:

near
1. At or to a short distance away from (a place):

Which preposition should I choose between the two?

I am sitting by/near the window.

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Both are correct. "By" indicates a greater degree of closeness than "near". You could replace "by" with "next to" without any loss of meaning.

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