Where does the Terraform local backend store its state?

The local backend in Terraform is designed to save its state in a file on the filesystem of the machine where Terraform is executed. This file is typically named terraform.tfstate. By default, it is created in the current working directory from which the Terraform command is run, making it easy to manage and locate.

Using a local backend enables users to maintain a straightforward setup without requiring any external storage solutions such as remote databases or remote state management services. This means that the Terraform state is directly accessible through the file system, allowing for a simple mechanism for tracking the infrastructure's current state against its configuration.

The other options involve concepts that don't align with how the local backend operates. For example, storing state in a remote database or in environment variables would entail a more complex setup potentially including security concerns, which are not relevant for local backends. Similarly, keeping state in local memory would not provide persistent storage, which is critical for tracking changes to the infrastructure over time. Overall, the choice of storing state in the terraform.tfstate file directly reflects the essential functionality of Terraform's local backend.