Hi,
This enables you the local authentication for your vty access. But you should have the respective AAA configuration for authentication created prior giving this command. Something like the below example..
Router>enable
Router#configure terminal
Router(config)#aaa new-model
Router(config-if)#aaa authentication login default local
Router(config)#line vty 0 4
Router(config-line)#login authentication default
Router(config-line)#end
Hope this clarifies your query
Regards
Karthik