Update use cases for 'local' packages (#4048)

Context:
dbt-labs/dbt-core#8541 (comment)

## What are you changing in this pull request and why?

There are multiple legitimate use cases for 'local' packages, beyond the
one that's currently documented — especially as we see more
multi-project setups.

website/docs/docs/build/packages.md

@@ -284,18 +284,35 @@ packages:
 </File>
 
 ### Local packages
-Packages that you have stored locally can be installed by specifying the path to the project, like so:
+A "local" package is a dbt project accessible from your local file system. You can install it by specifying the project's path. It works best when you nest the project within a subdirectory relative to your current project's directory.
 
 <File name='packages.yml'>
 
 ```yaml
 packages:
-  - local: /opt/dbt/redshift # use a local path
+  - local: relative/path/to/subdirectory
 ```
 
 </File>
 
-Local packages should only be used for specific situations, for example, when testing local changes to a package.
+Other patterns may work in some cases, but not always. For example, if you install this project as a package elsewhere, or try running it on a different system, the relative and absolute paths will yield the same results.
+
+<File name='packages.yml'>
+
+```yaml
+packages:
+  # not recommended - support for these patterns vary
+  - local: /../../redshift   # relative path to a parent directory
+  - local: /opt/dbt/redshift # absolute path on the system
+```
+
+</File>
+
+There are a few specific use cases where we recommend using a "local" package:
+1. **Monorepo** &mdash; When you have multiple projects, each nested in a subdirectory, within a monorepo. "Local" packages allow you to combine projects for coordinated development and deployment.
+2. **Testing changes** &mdash; To test changes in one project or package within the context of a downstream project or package that uses it. By temporarily switching the installation to a "local" package, you can make changes to the former and immediately test them in the latter for quicker iteration. This is similar to [editable installs](https://pip.pypa.io/en/stable/topics/local-project-installs/) in Python.
+3. **Nested project** &mdash; When you have a nested project that defines fixtures and tests for a project of utility macros, like [the integration tests within the `dbt-utils` package](https://github.com/dbt-labs/dbt-utils/tree/main/integration_tests).
+
 
 ## What packages are available?
 Check out [dbt Hub](https://hub.getdbt.com) to see the library of published dbt packages!