The use of local variables ensures that the variables in your functions are unaffected by the surrounding application and that your variables do not remain available after the calling function has completed its task.
Many user-defined functions are used as utility functions within larger applications. User-defined functions also typically contain a number of variables whose values and use are specific to that function.
The danger in using global variables, instead of local variables, is you may inadvertently modify them outside of the function they were declared in and intended for. This can lead to unpredictable behavior, and it can be very difficult to identify the source of this type of problem.
Another advantage of using local variables is that AutoCAD can recycle the memory space used by these variables, whereas global variables keep accumulating within AutoCAD memory space.
There are some legitimate uses for global variables, but these should be kept to a minimum. It is also a good practice to indicate that you intend a variable to be global. A common way of doing this is to add an opening and closing asterisk to the variable name, for example, *default-layer*.