I've only been fiddling around with it for a few days, but it seems to me that the default settings weren't very good - by default it'll load four 256-character-long snippets into the AI's context from the search results, which is pretty hit and miss on being informative in my experience. I think I may finally have found a good use for those models with really large contexts, I can crank up the size and number of snippets it loads and that seems to help. But it still doesn't give "global" understanding. For example, if I put a novel into LocalDocs and then ask the AI about general themes or large-scale "what's this character like" stuff it still only has a few isolated bits of the novel to work from.

What I'm imagining is that the AI could sit on its own for a while loading up chunks of the source document and writing "notes" for its future self to read. That would let it accumulate information from across the whole corpus and cross-reference disparate stuff more easily.