Localism is a preference for the place where you live. Your localism might make it hard for you to understand people who come from other countries.
Localism can range from a love for the town in which you live to a prejudice against other states or countries. A police officer who's accused of localism may have a habit of only giving speeding tickets to out-of-towners, for example. A more positive kind of localism might inspire you to buy vegetables that are grown nearby and purchase tools at the neighborhood hardware shop instead of at a store that is part of a national chain.