In Windows, a local computer user is one whose username and encrypted password are stored on the computer itself. When you log in as a local user, the computer checks its own list of users and its own password file to see if you are allowed to log into the computer. The computer itself then applies all the permissions (e.g., "can use the CD-ROM", "can install programs") and restrictions (e.g., "cannot install programs") that are assigned to you for that computer.