Local is for people ( or ships) who are on your scanner, noone else will see it.
System is , as the name suggests, system wide, so everyone in the same system will see it. However, Disco chat is set to local by default, so if you want to write in system, you have to set it first.
It's totally fine to ask questions, even if their answer might be obvious.
Sending a message in the local channel sends the message to everyone in round about 14K range. So everyone on your scanner will receive the message. Nearby cloaked ships will also receive the message!
If you send the message in the system chat, everyone in the system will receive it.
You don't "set" to write in the system, you gotta type the following to make the message go where you intend it to go
/s would make the message system wide
/l would make the message local
/g would make the message go to the group
/r would make the message go to the last guy that PMed you