On any synth, local off usually used when you want to use that synth to control other gear. You may also want to turn it off to prevent MIDI loops (MIDI sent from the synth to the daw and back into the synth, which can have the effect of doubling the voices played).
When to use it or not use it depends on other factors in your setup, whether you have monitoring on for that Cubase track, etc. Checking whether its on or off is usually one of the first things I check if a particular hardware synth is acting up due to the MIDI loop thing.
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