It’s the closest ***on average to all other planets.***
The reason is actually pretty simple if you think about it.
At some point, any two planets are at their closest distance to each other and at some other point they are at their furthest apart. There’s math involved related to the planet’s speed and what not, but you should be able to see that the ***average*** distance is at least related to those two things: (1) what’s the closest that they get and (2) what’s the furthest away that they get.
Mercury has the smallest orbit because it is the closest planet to the sun. That means that when it is ***closest*** to the other planet, the distance is basically the same as the distance from the other planet to the sun. Similarly, even when Mercury is as ***far away*** from the other planet as possible, it is only about the same as the distance from the other planet to the sun.
Now consider something like Jupiter and Saturn. Yes, when they are closest, they might be closer than say Jupiter to Mercury, but when they are farthest apart, they are ***over twice*** the distance from Jupiter to Mercury (because you go from Jupiter to the Sun, which is about the same as Mercury, back out to Jupiter’s distance, and then even further to Saturn’s distance).
Because Mercury’s orbit is the smallest, it never has this massive distance away, and that makes the ***average*** distance the smallest.
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