what is the problem ??

You haven't actually said what your problem is, but you're trying to reference Target outside of your for loop. Try this:

 var explosion : Transform;
  
 function Update(){
     var targets = GameObject.FindGameObjectwithTag("target");
     var cloest : GameObject;
     var closestDist = Mathf.Infinity;
  
  
     for (Target in targets) {
         var dist = (transform.position - Target.transform.position).sqrMagnitude;
         if (dist < closestDist) {
             closestDist = dist;
             closest = Target;
         }
 
  
  
         transform.LookAt(Target);
  
         transform.position = Vector3.Lerp(transform.position, Target.position, Time.time*0.5);
  
         if (transform.position==Target.position){
             Instantiate (explosion, Target.position, transform.rotation);
             Destroy(gameObject);
         }
     }
 }