These directories contain the files distributed by Donald Knuth from
ftp.cs.stanford.edu:pub/tex. They have been updated by him for his
2021 tune-up of TeX and Metafont.

The dist/ subdirectory contains the files that he considers part of
the official TeX system.

The local/ subdirectory, on the other hand, contains some
supplementary files written by him (which are mostly copied into the
main TeX distributions), as well as old versions of files created by
other people, parts of an old Unix TeX installation, derived files,
and other miscellany. Don't take the conglomeration too seriously.

For more links, see https://ctan.org/pkg/knuth-dist.