It means that labels are generated locally for the IGP prefixes learnt. Be it a label generated by ldp, rsvp or bgp, they all are locally significant. Every node can have different label for the same prefix.
When we run "show mpls for <prefix>" command, we can see two labels - Local label and outgoing label. the outgoing label is the label generated by the next-hop device or the peer device based on which the forwarding will happen. Note that this outgoing label can be same or different for the prefix.
Hope this clarifies.
Thanks
--Vinit
