@Tulikaa local are the posts of people just on this instance. Federated are posts from any instance on the whole internet.

@Tulikaa 👀
A local timeline shows all public toots from users on your instance. You can think of it as a mailing list for everyone in your town. The federated timeline extends the local timeline by one degree of separation. It shows all the public toots from people who are followed by the users of that instance