They changed how the local files thing worked on Spotify and it's rubbish now. All my downloaded music is on my PC and I had it added to Spotify as local files and it played on all my playlists, no matter which device I was using, as long as I'd synced the playlists.
Then they changed it so that the local files you were playing had to be on the device you were playing them on. So whenever I was out driving, my playlists would skip all the local files, as they were not on my iPhone.
That might have changed again and there might have been other ways around it, but I found it really irritating, when it worked perfectly for years.