You MUST protect the whole circuit at the power source. The wire must be at least 125% of the ampacity of the protection. You can also protect the device where it takes its power from the wire run. That should be what the dataplate states. If you change wire sizes smaller you MUST again protect for the smaller wire size @ at that tap. And the protection must be at least 125% of the smaller wire size. If you ground a wire a foot from the battery but your fuse is 13 inches down that foot of wire is going to melt red hot and start a fire
Let's try this scenario...
Run your wires from the battery to a fuse panel at the helm 2/3 the boat length. Are those fuses at the power source (battery)? NO. Lets look at the 12v DC in a automotive vehicle. The fuse box is under the dashboard, NOT at the battery/power source. If you were to worry about your negative and positive wires shorting out together then yes a fuse at the power source/battery would help.
I'm a bit confused with your statement:
"If you ground a wire a foot from the battery but your fuse is 13 inches down that foot of wire is going to melt red hot and start a fire"
A foot is only 12 inches so how are you installing a fuse at 13 inches?
Also fuses do not get installed in the ground/negative wire. They get installed in the positive wire.
Or are you trying to say that you have a wire run with a 12 inch negative/ground wire and in the positive wire the fuse is 13 inches away because they are not equal lengths away from the power source it will cause a fire? That is a big nope.
But like I said, I don't understand what you were trying to say so I'm confused!
If you're trying to say that (let's say for example) a trolling motor 20 feet (240 inches) away from the battery and has a fuse right next to the trolling motor and the motor shorts out, the wires leading to it will get red hot, melt and cause a fire? Sorry THINK again. If the wires leading to it short out together (positive & negative) than yes. But only if the insulation around both wires in the exact same location deteriorates and the bare wires touch each other will that happen.
EDIT:
Yes, you can run a positive feed wire say 20 feet long and tap into it any where you want. Just make sure all wires are of proper gauge and install the proper amp fuse into the tapping wire for the appliance, i.e. trolling motor.