When you say "local server url", I can imagine two things

1. Routing to an on-premises server - This will work great as long as the user has access to that server when they need to use that add-in. I.e. It will need to be available on the public internet or the user will have to have a VPN to access the add-in.

2)Routing to a localhost server on the same machine - This will also work but you'll need to consider whether that trade-off makes sense in terms of how it can affect machine performance and your needs to update the web service to address bugs.