Highlight Local Symbol Mode will put a highlight overlay over references to the symbol under point. Within the context of the function or method body point is in, all occurances of that symbol will be highlighted. Each location will be analyzed to make sure it is the same as the location where point is.
Unlike Highlight Func Mode which lighlights the tag the point is in, this highlights uses of the symbol the point is in. Note that the “current tag” is an entity that may contain code that the point is in. A symbol is a single word or symbol under point.