Local Policies determine the security options for a user or service account. Local policies are based on the computer a user is logged into, and the rights the user has on that particular computer. Local Policies can be used to configure:
Audit policy. Determines which security events will be logged into the Security log on the computer (successful attempts, failed attempts or both). The Security log can be viewed through the Event Viewer GUI.
User rights assignment. Determines which users or groups have logon or task privileges on the computer.
Security options. Enables or disables security settings for the computer, such as digital signing of data, Administrator and Guest account names, floppy drive and CD ROM access, driver installation, and logon prompts.
Important: Local policies, by definition, are local to a computer. When these settings are imported to a Group Policy object in Active Directory, they will affect the local security settings of any computer accounts to which that Group Policy Object is applied. Therefore, it is important to note the order of precedence for security policies. Security policies associated with Group Policy (Organizational Units) override policies established at the local level. Policies from the domain override locally defined policies. In either case, user account rights may no longer apply if there is a local policy setting that overrides those privileges. This is important because the behavior of Microsoft Windows 2000 can be quite different from the behavior in Microsoft Windows NT. For example, when password policies are configured for the Domain group policy (as they are by default), they affect every computer in that domain. This means that the local account databases (on individual workstations) in the domain have the same password policy as the domain itself.