I'd advocate for player hosted / dedicated servers over "Locals Only". When you have community tools to regulate toxicity, you end up with a much better community. See also the TFC, TF2, Soldier of Fortune, Jedi Knight, Quake 3, CoD 4, etc.... servers I played and admin'ed on growing up.
I actually ran CS 1.6 servers on a spare desktop at home and met some close friends because they were on the same local node, their ping was constantly <80ms and so they chose my server over and over again. When I was playing and told them where I lived, they lost it and said they lived in the same area. We kept giving a little bit more information to each other, making sure it wasn't just someone fishing for some kids address, and found out we lived in the same neighborhood. Met probably 6 guys this way that I'm still friends with. :)
Having a larger worldwide population to match with means matchmaking can do a better job of trying to find someone closer to your level. Playing any game with a high skill ceiling with IRL friends is what often just results in a skill gap too wide for either of us to have fun, and then who else can I even go play with?
And that's assuming anyone you know IRL even wants to play the niche games you love best.