Local SEO means optimizing for a specific location. If you’re a local business that serves your customers from a brick and mortar store in Kitchener, it serves you no purpose to rank for a term in Vancouver. You would target your SEO to people who are searching for a store in Kitchener and the surrounding areas.
Local SEO also refers to appearing in Google’s Local Pack. The Local Pack refers to the top three local results that Google displays on the first page of results. If you’re not in the top three, users will need to click “More places” to get a list of businesses in the city you’re searching for.
SEO, in general, refers to optimizing your site to appear for a specific keyword. If you own an online business, then optimizing locally may be helpful, however, you would want to show up for that keyword no matter what part of the world is searching since you’re not limited to who and where you sell your product.