As every so often, Microsoft have their very own, and sometimes confusing way of naming things.
Local and remote in a Windows Firewall context don't mean what comes to mind first. The correct translation would be:
Local = Destination Address
Remote = Source Address
So, in "local" you specify to which destination IP the rule applies. Obviously, this destination address has to be bound to one of your network interfaces. If your machine has only one interface and one IP address, you can just leave it at "any" as it will not reply to other IP addresses than its own anyway.
In "remote" you can now specify the source addresses that are allowed access. These addresses don't have to be remote in the sense that they lie outside of your network.
Hope this clears this up.
Link for further reading: https://technet.microsoft.com/en-us/library/cc771905.aspx