Since many people have issues understanding what local axes refer to, I decided to create a little illustration.
Every dimension object typically uses an asset made of textured geometry. All the vertices that define its geometry have x, y and z values.
Lets take this little boat:
If you just put it down, you can see that it looks into the z-axis, because that's how it's defined.
Lets take a couple more and spin them around a pole with their nose slightly upwards:
I morphed little axis indicators that represent the local coordinate axes. Those are the axes that are used to define the asset geometry, which obviously differ from the global axes of our dimension now (see global indicator in the top left), since we transformed (rotated) each instance.
So sometimes we want to move objects along a local axis. In this example I moved them all except the left one by 1 unit on their local z-axis:
As you can see, they now touch the pole in the middle because they were moved along their own blue axis. The indicators were not moved btw.
Related to this is "Transformed X/Y/Z Offset" in the Offset Calculator. If you don't want to move the object itself along its local axis, but a different object, you need to transform that vector into global coordinates. Now the Offset Calculator doesn't support boats (yet), but you should get an idea now what the local axes of a building block are, and why you would want to offset another item by that block's transformed width, length or height.