A package is listed under "local or obsolete" if synaptic is not able to determine the repository from which the package was (most likely) installed from.
Let me rephrase that: synaptic tries to determine the (most likely) source repository for every package. If such a source repository cannot be found the package is listed under "local or obsolete".
Explanation: the ubuntu package manager (apt/dpkg) does not keep track of the repository from which a packages is downloaded when it is installed. In other words, once a package is installed, there is no way to tell from where it was installed. The package manager can only guess the source repository. It does that by comparing an installed package against all available packages in all repositories.
If a package with the same version or newer is found in a repository, then it is assumed that the package was most likely installed from that repository. If no matching package is found in any repository, then synaptic assumes that the installed package is "local or obsolete".
There are three situation which can cause an installed package to be not found in any repository:
- You downloaded and installed the package yourself (dpkg -i foo.deb).
- You installed the package from a repository and later removed that repository (for example a PPA).
- You installed the package from a repository and later the package got removed from that repository (likely to happen in the proposed repository).
About the term "local or obsolete": the first item would be the "local" part, while the other two would be the "obsolete" part.
In my case, it seems that the third reason was the cause for the open office packages to be listed under "local or obsolete". I had the proposed repository enabled. The open office packages were upgraded in proposed, and later removed from proposed. See this question for more detailed information.