@keerthana_hn Setting up dynamic media in locally is same as setting it in environment.
First run your instance in any run mode (Dev, Stage, PROD)
You need to get the dynamic media account details as DM is a licensed version.
The same level of DAM setup should be their your local.
Below link shows how to set alias account if needed
https://experienceleague.adobe.com/docs/experience-manager-cloud-service/content/assets/dynamicmedia...
if you are looking to setup a hybrid mode of DM then refer to below link
https://experienceleague.adobe.com/docs/experience-manager-64/assets/dynamic/config-dynamic.html?lan...