Like all things, it depends. There are companies that go out of their way to solicit applicants from all over, there are companies that have preferred feeder schools, which may or may not be local, and there are companies who focus on hiring in their own backyard. It depends on the complexity of needs, the resources for recruiting, and the size of the incoming “class”. Smaller companies often don’t hire as many employees every year or have the resources to cast a wide net so are the most likely to have a hiring protocol that focuses on local schools.
With that said, almost every company will consider an applicant with the right experience and skills, but it may take a bit more ingenuity and effort to get that consideration if you aren’t in their usual pipeline.
I have worked at companies where alums of a certain school made sure their school was on their “list” to receive recruiting visits.. (In one case, it was a state flagship in a state where the company had no presence.) At another company, it was common for folks to reach out to professors they knew to find out if anyone doing post-doc work was involved with something we were looking for. None of this was based on geography, but relationships mattered.
In any case, I suspect it is rarely a preference for local grads but HR executing the easiest plan which has brought in employees who have worked out well.