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How does linux determine that incoming packet is local (NF_IP_LOCAL_IN hook is triggered)?

Trying to understand https://github.com/torvalds/linux/blob/master/net/ipv4/route.c but failed.
Does anyone know what are the conditions that need to be met to trigger the NF_IP_LOCAL_IN hook?

I've come here all the way from my original problem here https://community.ui.com/questions/HOW-EXACTLY-does-vyos-determine-whether-traffic-is-WANIN-or-WANLOCAL/4cf6100b-d862-456e-82c3-1c97dd8c0cc4


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