its mean which users has the rights to login and use the machine, its the first step before what permission they have on the machine.
this policy you can find it by run gpedit.msc
navigate under computer configuration to:
user right assignment
in the right pane you will find "log on locally"
double click it and you will see which users and groups have the right to login to the computer.
in a Domain Controller (DC) the for example a domain user account cannot login to the (DC) but can be login to any other computer if there is no restriction.
Allow log on locally
This logon right determines which users can interactively log on to this computer. Logons initiated by pressing CTRL+ALT+DEL sequence on the attached keyboard requires the user to have this logon right. Additionally, this logon right may be required by some service or administrative applications that can log on users. If you define this policy for a user or group, you must also give the Administrators group this right.
On workstations and servers:
On domain controllers: