We want to ensure that you don’t end up paying (using site limitations) for staging or test environments. So, within the context of how many sites you are permitted to use your themes on as a Theme Club member, local sites for development are not included in our limitation.
Sites on localhost, or sites that are on domains with invalid endings (.dev or .local, for example yoursite.dev) will receive automatic updates. A “site” in this context is bound to a domain. If you have multiple WP installations in a single domain, for example to have the site in multiple languages, that counts as 1 site. If, for example, you have a “staging” environment on a subdomain of the primary domain (primary site: www.yoursite.com, staging site: staging.yoursite.com), this also counts as 1 site.