I have a domain name that I want to redirect to my local server. How do I do this?
This answer relates to setting up a local testing environment that works on the LAN only. It seems from comments that the requirement is to redirect all external requests as well - this is a different requirement and is better covered by the other answers. (Although you might still need the points covered in this answer depending on the capability of your router. ie. Does it allow loopback?)
In your Windows HOSTS file you can set a mapping from your domain to your localhost (127.0.0.1):
127.0.0.1 example.com
Located in C:\Windows\System32\drivers\etc\hosts
Any requests for example.com will then go to your localhost - this is suitable for testing just on your local machine.
If you want to be able to test this from any machine on your LAN (including phones, tablets, etc.) then you can set an A record in the DNS Zone for that domain (perhaps for a localtest. subdomain) that points to the internal IP address of your server. eg. 192.168.1.20.
First you need your external IP address, if you want anyone else to reach your domain.
Second you need a DNS server that holds your domain record, and uses an A Host record to point to your external IP.
Then you need to setup your domain to use that DNS server. Probably in the control panel, of the company you used to register the domain.
The answer will differ depending on whether your local network is on a dedicated IP or not.
If your external IP is dedicated, set an A Record to that IP. You should be able to do this through your domain provider's control panel.
If your external IP is dynamic, like on most home networks, you'll need to use a Dyamic DNS service to always update your domain to point to your local IP, even after it changes. Dyn has been doing this for as long as I can remember, but plenty of organisations offer this service.
After that, it's down to your local network config, which hasn't been mentioned in the question. Presuming you're behind some sort of router, you'll need to tell that direct traffic to your local server's local IP for whatever ports you're using.