A term used to denote radio stations which broadcast to a local area, i.e. not nationally. They usually run local adverts for locally run businesses, if commercial. Local government supported stations usually cater more for the local community, e.g. advertising school fete's etc.
Local radio is often seen as a stepping stone for Radio Talent, or DJ's, to get onto National Radio. It is also seen by many budding musicians as an easy way to showcase their talents to a wider audience than just local gigs, etc.