Refer MySQL documentation: http://dev.mysql.com/doc/refman/5.1/en/optimize-table.html
Quote:
By default, OPTIMIZE TABLE statements are written to the binary log so that they will be replicated to replication slaves. Logging can be suppressed with the optional NO_WRITE_TO_BINLOG keyword or its alias LOCAL.
Maybe we should replace LOCAL with NO_WRITE_TO_BINLOG keyword. LOCAL is probably an 'old form' now. But if you do not have binlog enabled and don't use replication it does not matter if you select this or not.