Cloud accounts · Local folder accounts
What is a Local folder account?
Short answer: A Local folder account gives a folder on your Mac a nickname so it appears alongside your cloud accounts in transfers. It's handy for mounted network shares or other sync apps' folders. Nothing is copied; up to five are allowed.
It's a shortcut that gives a folder on your Mac a nickname, so it shows up in the account lists just like a cloud account. It's handy for a network share you've mounted in Finder, or a folder another sync app keeps, that you want to pick quickly as a transfer source or destination.
No sign-in is involved and nothing is copied when you add it — it just points at the folder. You can have up to five Local folder accounts. Removing one removes only the shortcut, never the folder or its files.