How do i get if a player is within 7 studs of a object?

That's a pretty cool idea, FunzreyAlt!

FearMeIAmLag, yourchicken, and crazycittycat have all addressed the key issue, but in addition to their collective advice, I'll offer some further refinements.

--Personally, I think you should define functions that will be used later in the script before rather than after the block that they are used in.

microphone = --path to the microphone
distance = 7 --distance in studs for microphone to activate

function processCommand(speaker, message)
    if message:lower() == "whoami" then --works for "WHOAMI", "WhoAmI", "whoamI", etc..
    if (speaker.Character.Torso.Position - microphone.Position).magnitude <= distance then
            local msg = Instance.new("Message", game.Workspace)
            msg.Text = message                                  
            wait(5)
            msg:Destroy()
    end
end

game.Players.PlayerAdded:connect(function(player)
    player.Chatted:connect(function(message)
        processCommand(player, message)
    end)
end)

game.Players.PlayerAdded:connect(function(player)
    -- when `player` joins the game, start listening for their chatting
    player.Chatted:connect(function(message)
        -- and each time they chat, do stuff with `player` and `message`
        processCommand(player, message)
    end)
end)
function processCommand(speaker, message)
    -- if someone chatted "whoami"
    local playerW7s = false --i dont know how to get if a player is within 7 studs of a object
    local mag = (part.Position - speaker.Character.Torso.Position).magnitude
        print("Checking if player is within 7 studs..")
    if mag <=7 then
        if(playerW7s == true) then
                 local msg = Instance.new("Message", game.Workspace)
                 msg.Text = message
                 wait(5)
                 msg:Destroy()
        end
    end
end

-- btw your script cleaning is horrendous. 
-- [[ What .magnitude basically does is find if your user is closer than x studs, by calculating how far
point a is from point b. ]] --

You could use magnitude to check the distance of the player's torso from the microphone. Of course you will have to keep looping over the player whenever they move in order to update their position and you will have to change the paths to the mic and player objects as this is just an example.

if (player.Character.Torso.Position - workspace.Mic.Position).magnitude <= 7 then
    --display the message
    --destroy the message
end

game.Players.PlayerAdded:connect(function(player)
    -- when `player` joins the game, start listening for their chatting
    player.Chatted:connect(function(message)
        -- and each time they chat, do stuff with `player` and `message`
        processCommand(player, message)
    end)
end)
function processCommand(speaker, message)
    if message:lower() == "whoami" then
            local playerW7s = speaker:DistanceFromCharacter(mic:GetModelCFrame().p)
            print("Checking if player is within 7 studs..")
            if(playerW7s == true) then
                print("The mic is in 7 studs of the speaker.")
                local msg = Instance.new("Message", workspace)
                msg.Text = message
                wait(5)
                msg:Destroy()
            end
        end
    end
end

I suggest using tabs. Its much cleaner and easier to edit. This was fully tested by me and one of my friends. It should work perfectly and they should see the message if the speaker is in 7 studs of the microphone. If your microphone is not a model then change the mic:GetModelCFrame().p to mic.Position