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I am reading up Maven – The complete reference and came across this
Maven assumes that the parent POM is available from the local repository, or available in the parent directory (
../pom.xml) of the current project. If neither location is valid this default behavior may be overridden via the relativePath element.
What exactly is meant by local and remote repository for a Maven installation and a project?
A local repository is a local directory structure that caches artifacts downloaded from remote repositories, or those that are manually installed (eg from the command line option).
A remote repository is a web service (defined by a URL) that contains versioned artifacts. This might be as simple as an Apache server, or a full-blown Maven repository, such as Artifactory, that allows uploading, permissions based on a user directory, etc.
http://maven.apache.org/guides/introduction/introduction-to-repositories.html