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 18
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