The phrase "in point of time," is the same as saying "at that point in time." The meaning of the term is also the same as saying "at that time," or "at that point."
The purpose of the language of the regulation is to stipulate that at the time of occurence, the pilot must land at the nearest suitable airport.
The expression is found three times in FAA publications: twice in 14 CFR 121.565, and once in advisory circular AC 120-42A, in reference to 121.565.
The language as expressed in the regulation is really an abberation of proper English, and was made popular by those wishing to distinguish a point in space from a point in time. This expression gradually gained wide acceptance, such that today one commonly hears "At this point in time,..." instead of merely saying "at this time." This inaccuracy in language has been repeated in the regulation as an expression of the point at which one starts the search for the nearest suitable airport.
In this case, the FAA has chosen not to require the pilot to find the nearest suitable airport to the geographical location where the engine failure or shutdown has occured, but the nearest suitable airport at the time of the occurance. Perhaps only a technicality, as the aircraft continues to travel and move after the failure, but the intent of the regulation is not ambiguous and is clear:
§ 121.565 Engine inoperative: Landing; reporting.
(a) Except as provided in paragraph (b) of this section, whenever an engine of an airplane fails or whenever the rotation of an engine is stopped to prevent possible damage, the pilot in command shall land the airplane at the nearest suitable airport, in point of time, at which a safe landing can be made.
(Plain english: Except as provided in paragraph B, when the engine quits or the pilot shuts it down to keep it from being damaged further, the PIC will land at the nearest suitable airport at the time of the engine shutdown or failure, where a safe landing can be made).
(b) If not more than one engine of an airplane that has three or more engines fails or its rotation is stopped, the pilot in command may proceed to an airport that he selects if, after considering the following, he decides that proceeding to that airport is as safe as landing at the nearest suitable airport:
(1) The nature of the malfunction and the possible mechanical difficulties that may occur if flight is continued.
(2) The altitude, weight, and usable fuel at the time of engine stoppage.
(3) The weather conditions enroute and at possible landing points.
(4) The air traffic congestion.
(5) The kind of terrain.
(6) His familiarity with the airport to be used.
(c) The pilot in command shall report each stoppage of engine rotation in flight to the appropriate ground radio station as soon as practicable and shall keep that station fully informed of the progress of the flight.
(d) If the pilot in command lands at an airport other than the nearest suitable airport, in point of time, he or she shall (upon completing the trip) send a written report, in duplicate, to his or her director of operations stating the reasons for determining that the selection of an airport, other than the nearest airport, was as safe a course of action as landing at the nearest suitable airport. The director of operations shall, within 10 days after the pilot returns to his or her home base, send a copy of this report with the director of operation's comments to the certificate-holding district office.
(Plain English: If the pilot lands somewhere other than the nearest airport at the time of the engine failure or shutdown, he needs to send two copies of a report about why he did it to the Director of Operations).
Viper posted while I was preparing my response. His comments are also correct. One must think not only in terms of the nearest acceptable airfield geographically, but also in terms of time to get there. Terrain, weather, winds aloft, aircraft performance considerations, etc, may dictate that while a suitable airport is closer geographically, getting there might take longer. Clearly the intent of the regulation is to get on the ground without undue delay. If a suitable airport is a shorter flying time and one elects to go to one that's a shorter distance but takes longer (traffic delays, equipment, performance, weather, whatever)...one will be in violation of this regulation.
Ask what field, from the time of failure, provides the most expeditious soloution in consideration of safety, and go there. This is the meaning of the regulation.