I'm utterly useless when it comes to MIDI (I normally just keep changing values until it works, lol), but turning Local Off disables the keys and instead lets you control the Virus from an external keyboard or sequencer.
With Local Control On you will be able to play the Virus' keys, but the signal may double back on itself (generate an echo) if it's hooked up to anything else, as the note data is being sent to your sequencer and perhaps back to the Virus again (depends on the config).
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