Support for the Ruby 2.1 series ended on March 31 2017. See here for details.
The local source finds gems in the current directory for fulfilling dependencies.
Local sorts before Gem::Source and after Gem::Source::Installed
# File rubygems/source/local.rb, line 16 def <=> other case other when Gem::Source::Installed, Gem::Source::Lock then -1 when Gem::Source::Local then 0 when Gem::Source then 1 else nil end end