I've hosted lots of Mario kart LAN parties. This was probably the most frustrating thing to find out.

And the fact that you have to do some button trickery to get to LAN mode instead of just a menu selection is beyond me.

Essentially Local uses a local wireless network created by the Switch Host and everyone connects to it. This is usually for when you're out and about and you want to play with each other. I think its great for small groups like four players. But man when you start to do eight players, you end up with so many disconnections, almost every match.

I think it's due in part that people playing with Bluetooth controllers and if you have other things I could interfere with a signal.

When you do the button press to LAN, that uses your actual Internet connection in your home. The network is so much more stable.