When UseLocalCachedCopy is set to yes, search.cgi tries to generate excerpts and "Cached Copy" documents using the original location of a document. If the original copy does not available anymore, search.cgi tries to fetch cached copy from the database.
UseLocalCachedCopy yes can be useful when indexing local files (i.e. the file:/// URL scheme). UseLocalCachedCopy yes helps to remove the Section CachedCopy command from indexer.conf and thus avoid storing of cached copies in the database making the database smaller.
The default value is no, which means search.cgi won't try to find the original copy of a document, and will try to fetch cached copy directly from the database.