This is the default backend and it stores state on the local filesystem, locks that state with system APIs, and performs operations locally. f you don’t specify a backend in your Terraform configuration, Terraform will use the local backend.

The local backend stores state on the local filesystem, locks that state using system APIs, and performs operations locally. 

In this example, the path argument tells Terraform where to store the state file. The path is relative to the root module directory. If the path is not specified, Terraform will use the default location, which is terraform.tfstate in the root module directory.