What is the Local Server in the editor for? Can I use it for building an mmo? I need a server for a couple of my games and I want to know if I can use those. If not, do you guys know of any good free servers?
No.
Local Server feature is used to have source code served from local machine during development, and is used as alternative workflow to allow people use their IDE of preference and github workflow.
It is explained in User Manual: Workflow which is first link in google if you search for “playcanvas local server”. Many answers are in google 
It has nothing to do with Multiplayer Server for games.
If you want to have local server for game development, then you can simply make one using big variety of tools. I recommend to start with simple node.js + sock.js/socket.io app. To develop such game locally on your machine, you don’t need to buy anything.
In order to host it, so others can access public server, you will require most likely dedicated or virtual server, I’m not aware of free ones. There is option to let people to connect to your local machine, but that requires a Static IP from your ISP and some Port Forwarding on your router, and this is not secure nor long term solution, but free.
I personally rent one EC2 Instance on AWS, and happily experimenting my multiplayer things stuff on it.
So people can’t play with each other in my game if I use node.js? I have no money so I need free hosting.
They can, if you host your application on publicly available server.
Ok, good. Two of them are too small to pay for and none of them make any money (completely free) so the server must be free. I will get the server soon. Can you tell me how to use the node.js? I don’t like using tutorials.
Sorry, but self-learning is the most essential skill if you want to be able to code and grow as developer, making games or any other software.
Tutorials is best option for you, and there are plenty of them out there.
Ok. I guess I’ll find one and come back if I have trouble.