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The DocumentDB Local option helps you work with a local DocumentDB instance for development, prototyping, and testing.
Use Set up DocumentDB Local when you want the extension to create and manage the official container. The setup supports Docker Engine and Docker Desktop. It requires a Docker CLI that the VS Code extension host can use to reach a Linux-container Docker daemon.
Use the manual connection flow when DocumentDB Local is already running and you only need to save its connection details.