Although a local server would certainly improve latency, our forecasts suggest that the resulting fragmented player base would face a lot of issues with matchmaking and queue times. While there are levers we could pull such as removing game modes and limiting certain queues to peak hours, we’re afraid that the number of compromises we’d have to make could lead to an overall player experience that is more frustrating and less enjoyable than the one we have today.
I can agree with the statement above considering what the local Dota 2 community is like. Don't get me wrong I've sunk close to 4000 hours into Dota 2 so I know it's great that we have local Dota 2 servers; it definitely makes it quick and easy to find a normal game which is enjoyable to play thanks to low ping but that is where the benefits stop. Having a local server has created an isolated community, fragmented from the rest of the world where everyone only plays one mode because trying to get anyone to play anything else only serves to further fragment an already fragmented community.

This was proven when custom games launched and even that #OSR thing took off. At first everyone tried it out but quickly went back to playing the normal game because the community simply isn't large enough to sustain the interest of the other modes.